We are a 'tax haven'

November 17, 2008

Dear Sir,

In my view it is a travesty and just plain intellectual dishonesty for the Premier and others to continue to perpetuate the lie that Bermuda is not a tax haven. In fact Bermuda was amongst the very first modern tax havens, perhaps just after Switzerland.

From a very early age and largely under the UBP we have been indoctrinated to believe that Bermuda is not a tax haven. Today, under a PLP Government, we are being told the very same thing. This is unacceptable, because if we are not a tax haven, then we in Bermuda must be the only ones in the world who think so. I believe many of us are confused because we have been duped into believing that "tax havens" are associated with sleazy, unregulated "third world" banana republics. Nothing could be further from the truth as can be seen in the no tax and low-tax regimes of Switzerland, Austria, Isle of Man and of course Bermuda. The focus of the whole argument as it is posed is flawed and way off base. Deliberately so, I believe.

The situation is rather analogous, on the issue of whether a woman is a prostitute or not, to the comparison of a "street-walker" and a hostess of an elegant and posh escort agency. In both cases prostitution is at work. So whether your country is an unregulated, sleazy third world banana republic evading or avoiding taxes that would otherwise be paid in or to "onshore" jurisdictions, or your country is a well-regulated, even transparent, KYC jurisdiction evading or avoiding taxes, then your country is nevertheless a tax haven for such companies whether they are corporate inversions, reinsurance companies or the like. The whole game is about paying the least tax possible.

Put simply, "a tax haven is any country whose laws and regulations allow foreign investors (both individuals and corporations) to reduce their tax liability through the utilisation of offshore vehicles such as trusts, international business corporations, bank accounts, and credit cards". Coupled with the various "exemptions" that Bermuda offers to many of these international companies (Bermuda has over 13,000), Bermuda clearly qualifies as a tax haven and I defy anyone to show me differently and am willing and prepared to publicly debate those who will say otherwise.

In my view, to avoid this perennial "pas de deux", "cat and mouse", "step and fetch it" existence and behaviour, vainly denying that we are a tax haven; we should "fess-up" that we are indeed so and negotiate favourable terms with the aggrieved "tax authority". Better yet, do what Barbados has done i.e. convert from a "no-tax" jurisdiction to a "low-tax" regime (with a double-taxation treaty in hand) and have these companies that are saving and making millions by operating in our environment contribute a "reasonable percentage" of their earnings to our consolidated fund and ease the tax burden on Bermudian tax-payers for a change. Be good "corporate citizens" in other words. Charitable donations and other "cute" little hand-outs just do not cut it. We are more sophisticated than that, or should be.

We will not see a truly New Bermuda in the sense that Bermudians will have a better distribution of the wealth of one of the richest countries in the world on paper (per capita income of $76,000+); unless and until the PLP Government is prepared to stop "rearranging the economic and financial chairs on the Titanic". The PLP must get serious and firmly grapple with the fundamentals of an economy that was put in place and engineered by the merchant and ruling classes of society since 1620 to deliver the lion's share of that economy to themselves. The current PLP Government has been doing the same for the past ten years.

Hello? What changed in November 1998 was the manning of a train by the PLP that stopped at the General Election on the wrong track heading in the wrong direction driven then by the UBP. The PLP replaced the UBP train crew, boarded, started the engine and continued down the same track, in the same direction with an increased pace and an occasional stop to cosmetically fix or beautify a few way-stations. There has been no change in the direction or fundamentals of the journey the UBP had begun. Our present retention of middle schools and two senior schools are ample testimony for that conclusion.

The PLP must end the philosophy and practice of 'trickle-down' economics which only delivers, if at all, the "crumbs and scraps" of the economy to the working class (waiters, taxi drivers, bus drivers, etc.) Only a "bottom-up" approach by primarily, and for starters, tackling the fiscal (taxation) and monetary policies of this country is going to bring about an equitable distribution of the wealth in Bermuda to other than the most powerful and privileged.

Anything short of such a fundamental reformation is blowing smoke up and many of us are simply tired of the nonsense and are no longer fooled by such ploys of free-day care, bus rides and the like which are mere band-aids to our dilemma.

Let's get more serious please, or leave matters to those who are.

PHIL PERINCHIEF

St. David's

A new model needed

November 21, 2008

Rolfe Commissiong's defence of the Premier's presumption of how white Bermudians would have voted in the last USA presidential election using Bermuda as an example may have been a bit short-sighted. The voting habits of both races in Bermuda is indelibly pegged to our history. Our current political structure began when the culture and scent of segregation was still very present. The need amongst the established white community to maintain their economic might and the indignation and moral need for empowerment and equality amongst the blacks welded two separate activism within our political community. Anyone who stepped outside of the main thrust of either camp faced ostrasization.

It was a split within the PLP which severed the merchants from the labour. The UBP benefited from that split and the 1960s ostracizing and scorn pored upon this black merchant class by the PLP assured the UBP a perception of plurality. Sadly, unlike the broad base democratic model of the USA, our crony style has outlived the real development of our people keeping in place a voting style which statistically points clearly to a racially polarised electorate.

The USA has an entirely different political culture. In order to give a true test of how Bermudians, black or white, would have participated and voted in the last USA presidential election, they would have had to be a part of that social/economic experience. In other words if we were absorbed somehow into the American system where the white of Bermuda were divided nearly 50/50 between Democrats and Republican. It would be in that context that we could truly determine how Bermudians would have voted. On the same token Barack Obama never put himself forward as a black liberator, while I'm quite sure that he would have got the black Bermuda presidential vote, it's an equal question to be put to those amongst our black population who wear our race on their sleeves, on whether Barack Obama would have even got ascent to the political scene. In other words who amongst us would have voted for this so-called colorless man in his kinder years? Who would have assisted him to make the cut? Where would American whites fit in a Bermuda model? (probably same 95 percent UBP) Or even where would Obama fit? No one knows, so no-one should presume.

Yes, I agree that our politics is a sad commentary bemoaning the reality of a political system that has not barely evolved from its desegregation mode. This will not end until we find a way to put an end to our current partisan rut. We need to begin a new conversation on how to evolve our politics.

RAYMOND DAVIS

Southampton