The shocking way in which a few greedy people took advantage of the efforts of the government and voluntary services to feed the hungry during the recent lockdown reminds us of the looting of stores and pillaging of empty homes after Hurricane Irma. Yet the pandemic has made me realise how much our economy is largely based on helping the rich rob the poor.
Virgin Islands companies pay us registration fees to avoid business taxes in countries where they operate, and most of the cruise ships which bring us tourists are registered offshore. An Italian economist commented, “Tax avoidance (by the rich) strains the ability of countries to finance their healthcare resources” and accuses tax avoiders of complicity in deaths from Covid-19.
The innovative International Business Companies Act, 1984, which propelled the VI’s economy from one based on farming and fishing to world leadership in financial services, came with a price. It took over part of Panama’s role in offshore finance after the United States invasion destroyed its industry. However, the continuing furore evoked by the release of the Panama Papers supports the adage that if you sup with the devil you should use a long spoon.
Awareness of the challenges our own government faces in funding National Health Insurance and providing financial aid to those out of work should make us understand the scorn with which tax havens are viewed in countries reeling from tottering economies and underfunded health services. Our hospitality towards what are viewed by most European Union countries as unethical practices mould their attitudes towards VI financial services as a whole.
The Guardian newspaper reported in March that more than 100 residents of an East London block had asked their letting agents for 20 percent off their rent and assurance that nobody would be evicted during the pandemic, many of them being self-employed and nearly all losing work.
They were told that their requests were “unreasonable” and “unrealistic,” as any drop in their income could commonly be set off against expenditure on holidays, entertainment, travel, clothes and lunches they would not make during lockdown, while the landlords had to pay for the increased wear and tear on their properties. The agents would not deal with the association, but offered individual tenants 20 percent off May and June rents provided they paid 20 percent extra for July and August.
Any disclosure of an offer to anyone else in the building would have voided it. They were also forbidden to try contacting their corporate landlords directly. However, about 12 tenants did not even know their corporate landlords’ names, as their homes were owned by a faceless VI company. It has been estimated that the ultimate owners of some 4,000 properties in London alone are not known to the UK tax authorities.
The Indian press reported on April 10, 2019 that according to the Indian income-tax department the VI tax authorities had said that they could not share information on the several hundred Indians who have offshore investments there because the data got destroyed in floods in August 2017 and the relevant files were lost.
Commentators said that the VI had used the same excuse before and that they viewed it as highly suspicious that the tax evaders among India’s rich and famous should benefit from a natural calamity. Such confidential data, they pointed out, should be stored in the Cloud.
After Irma, we pledged to build back better, and with help from abroad we restored power and made the main roads passable. The hospitality and yachting industries were recovering well until the government had to turn away a cruise ship to keep out Covid-19. However, many of us are still without landlines, our postal services are virtually defunct, and our public libraries are closed at a time when the remote services they should provide are highly valued elsewhere.
We should use our present economic inactivity to repurpose our economy towards one based on the ethical values exemplified by the early Christian church’s practice of willing givers donating according to their ability to others according to their need. Reintroducing progressive income tax at as low a rate as the EU would accept might be a welcome step in that direction.
Meanwhile, the conclusion of multiple double taxation treaties would allow residents to reclaim withholding taxes presently retained by overseas jurisdictions and be able to make tax deductible donations to non-profits. Mass tourism never sat easily here, but yachters, history buffs and genealogists will continue to come, so we must cater for their needs.
Above all, with the demonstrable need for our food security, we should restore our forebears’ agricultural and fishing industries, but drive them on with modern reusable energy, from our prolific resources of sun, winds and waves. Developed nations will willingly pay us to produce organic crops and preserve our natural resources and endangered wildlife.
Government might create a think-tank to investigate the economics of reviving our boatbuilding industry and establishing small food processing plants. With doubts surrounding the survival of cheap airline and cruise-ship fares in an age of social distancing, we should restore pride in our brand by looking to Costa Rica for inspiration rather than Panama.