The Institute of Directors of UK, in a paper released on the 27th of July is urging the UK Government to embrace the concept of tax havens as opposed to the current policy of attempting to combat them.
The primary crux of the paper urges the UK government to relax some taxation rules surrounding UK based business, hedge-funds were a primary example. Specifically in regards to this, the paper says “If the UK’s tax rules were amended, hedge fund assets could be held in the UK, with no overall loss and some gain to the exchequer.”
This view is not met with overall support and faces staunch opposition, both from commentators and governmental actions. In early July at the Franco-British Summit, both countries set out to impose economic sanctions on tax havens by March 2010. Prime Minister Gordon Brown said “The writing is on the wall for tax havens wherever they may be”, he added “Tax transparency, full exchange of tax information and reducing tax avoidance are crucial for the health of the global economy.”
Opposing this, the Institute of Directors put forward the view that while imposition upon low tax states is the most obvious option it is not by any means the most efficient or beneficial. Richard Baron, Head of Taxation at the Institute of Directors, said in a press release that low tax states are a reminder that tax burdens do by no means need to be high and that the most productive option for the UK when dealing with them is to gently lower taxation and thereby stimulate the economy.
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