Jersey's business promotion agency, Jersey Finance, has published a new discussion paper prepared by a leading UK think-tank, which argues that international financial centers (IFCs) play a vital, positive role in the global economy.
Undertaken by the Institute of Economic Affairs (IEA), with support from Jersey Finance, the paper, "The Benefits of Capital Mobility", examines the growing importance of IFCs in the global economy and argues they are, in reality, pioneers in the area of transparency and good governance.
In particular, the paper argues that clamping down on IFCs would not raise tax revenues for larger countries but would shift investment flows by politicizing investment decisions. Jersey Finance said the paper also illustrates how the "tax neutrality" offered by IFCs to international investors benefits countries by facilitating foreign investment in infrastructure, supporting wealth creating activities, and fostering prosperity.
The paper highlights that as more investment capital is allocated across a diverse range of jurisdictions from investors around the world, IFCs help mitigate the potential for multiple taxation, ultimately having a positive impact on investment returns, which compound over time.
Geoff Cook, CEO of Jersey Finance, said: "When it comes to cross-border financial services, there is still a considerable amount of misunderstanding and misrepresentation. We think it is vital to form judgments based on facts. For this reason, we are committed to providing a clearer picture of the reality through research, with the aim of prompting a sensible, more focused conversation on what it is that centers like Jersey actually do."
He added: "This paper helps in that regard, seeking to reframe the international financial services debate and clarifying, with facts, the positive impact Jersey can have on the futures of people all over the world."
Jamie Whyte, Director of Research at the IEA, commented: "Offshore banking centers play an important role in the global economy, increasing international investment and economic growth. The attacks on them by European politicians are little more than demagoguery and a desire to eliminate tax competition."
By Courtesy of Lowtax.net