Burgess COMMENTARY

Peter Burgess

As a Channel Islander, I can tell Jeremy Corbyn how to stop tax cheats

Rather than destroy centuries-old democratic communities by imposing direct rule, the Labour leader should consider reforming Britain’s broken tax code

• Cameron’s offshore tax conduct was ‘ethically wrong’, Labour’s Tom Watson says - Politics live
• David Cameron admits he profited from father’s Panama offshore trust

Gorey Harbour in Jersey. Gorey Harbour in Jersey. ‘In a world of financial smoke and mirrors, tax havens are the looking glass ’ Photograph: Toby Melville/Reuters

The mighty are falling, and it is quite a sight to behold. David Cameron is squirming within a tangled web of half-statements, and the Chinese elite is desperately trying to close the eyes and ears of the nation. Paddy Power has opened a book on the next world leader to go.

Panama Papers hit David Cameron's approval ratings – politics live

Rolling coverage of all the day’s political developments as they happen, including reaction to David Cameron’s admission that he profited from his father’s offshore trust Read more

Not only have the revelations from the Panama Papers been juicy, but we’ve all been given ringside seats to the action by an unusually harmonious media, keen to reveal just how the 1% live.

I was enjoying it as much as anybody – until Jeremy Corbyn spoiled the party for me. Not just for me, but also my family, friends and the 160,000 other Channel Islanders, who shuddered as one when he uttered the words “direct rule”. As Corbyn suggested we kiss goodbye to 800 years of autonomy and democracy with one quick administrative flick of the wrist, I was sure I could hear murmurs of approval drifting across the English Channel.

Like the first stage of grief, our initial reaction in these islands has been one of denial. After all, why would Corbyn want to destroy perfectly peaceful communities? We’ve been very little trouble to the UK, and kept ourselves to ourselves for centuries. True, we have become pretty good at creating and managing some rather interesting financial structures that do help the world’s wealthy elite, but hey, we’ve all got to make a living. Anyway, much of the benefit heads straight to the UK, creating 180,000 jobs and swelling the coffers by £2.3 billion.

After denial comes anger – in this case, caused by injustice. I’m not some wealthy exile who chooses to live in Jersey for its 20% rate of tax, nor am I an investment banker who gobbles up million-dollar bonuses for Christmas. Few of us that live here are wealthy – the cost of accommodation ensures that – and almost none of us are investment bankers. They all live in London, a much larger tax haven.

Most people who live here belong to the 99% and are under no illusion as to our primary role, to feed the City of London

My life has been as ordinary as those of millions of people across Britain. During my childhood, my mum ran the house and my dad ran the local B&Q. We had no silver spoons or trust funds but we indirectly benefited from a finance industry that grew enormously during the eighties and nineties. Like so many postwar parents, mine prioritised a decent wage and a steady job for their children, and so quietly suggested that I might try accountancy or trust administration when it came to starting a career.

Those conversations never went well. To my teenage ears, nothing could have been as soporific as the prospect of a job in the finance sector. Unlike the swanky, Monégasque media representation of tax havens, Jersey and Guernsey aren’t so much about the excitement of buying and selling and wheeling and dealing as they are about the joy of holding other people’s assets and recording deals that happen in the City of London or New York.

The offshore industry is to these small islands as steel is to Port Talbot. It is woven into the fabric of society, it shapes lives and lifestyles but its dominance comes with as many costs as there are benefits, and the fear of losing it tops the list. The lure of steady work administering spreadsheets is offset by the lack of opportunities in other areas. When a community depends on one industry for 42% of its income, as Jersey does, young people look to pursue their dreams elsewhere, creating a demographic hole and an ageing population that will look very unattractive to today’s children.

Depopulation has already begun in Guernsey and, in the rush to plug the holes, governmental efforts to attract more wealthy residents from elsewhere, only serve to extend the wealth gap in a society where over 23% of households earn less than £20,000 per year. This in an island where the average household income is £62,000.

China steps up Panama Papers censorship after leaders' relatives named

Websites ordered to purge all reports related to documents following publication of political elite’s offshore secrets Read more

In a world of financial smoke and mirrors, tax havens are the looking glass. Most people who live here belong to the 99% and are under no illusion as to our primary role, which is to feed the City of London. We are however, in the privileged position of being able to see the vast wealth that criss-crosses the globe. We understand that when trusts are exempted from registers of beneficial ownership, it renders useless the company registers of which the Tories are so proud. When a company is owned by a trust, the path to transparency stops right there.

Many of us understand the dubious morality of a system that enables the wealthy to cut their tax bills, but we also know that the problem doesn’t lie with us. When the Labour leader calls for an end to tax havens, we see that he is looking to treat the symptom but not the cause. The UK won’t end tax avoidance by closing down the Crown Dependencies, it will only do so by changing its own loophole-laden tax laws.

As for direct rule, I’ve gone straight to the final stage of accepting that Corbyn is talking tough about something he doesn’t understand. If he wants to make a difference, he won’t succeed by destroying some of the world’s oldest democratic communities but by simplifying HMRC’s 17,000 page tax code and its excess of very profitable loopholes.