UK election puts spotlight on Bermuda
Bermuda and countries with similar economic structures are in the spotlight as the British electorate prepares to go to the polls.
Headlines that have included “Politicians not tough enough on tax avoidance, say voters” from The Guardian has Bermudian-based commentators considering the Island’s economic position and defending the role of international business in the British economy.
Another headline in the London daily inspired Walton Brown, of the Progressive Labour Party, to comment that Bermuda must find ways to adjust.
The story under “Pre-election debate sees parties united in tackling tax avoidance” in The Guardian reflects recent polls that show 58 per cent of voters feel promises made by the main political parties in Britain — Conservative, Labour, Liberal Democrats — do not go far enough on the issue,
An economist and political scientist, Mr Brown believes another coalition government will be formed after tomorrow. “There are two aspects to this UK election and the issue of tax havens,” he said. “One, the political parties in the UK are without question posturing for the elections, so a range of issues will have strong emotional impact on the electorate at a time when most governments are having a fiscal crisis. It is part and parcel of the electioneering in the United Kingdom.
It remains to be seen to what extent the winning party will enact those policies.
“And, two, the whole issue of labelling countries as tax havens — I personally don’t see Bermuda as a tax haven — but the whole international labelling is a battle we can’t win.”
He stated: “We have to find ways to tackle this onslaught, particularly from the country that we answer to politically. We don’t have the wherewithal to effectively challenge these matters when they’re raised by the UK or any other large country.
“We have to try and find ways to adjust what we have in place in Bermuda; to maintain the structure that has led to our success.”
He said Bermuda must find ways to ameliorate the hostility that the Island faces from Britain and other countries. Mr Brown said we face the label, even though Bermuda has signed up to numerous international tax agreements.
Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, stated that Bermuda has tax co-operation and enforcement agreements with all the G20 nations and more than 80 jurisdictions.
“Bermuda’s regulator is committed to meeting regional and international solvency standards as illustrated by Bermuda being found a ‘qualified jurisdiction’ by the US National Association of Insurance Commissioners, and by its application for full equivalence under Solvency 2 with the European Commission,” Mr Kading said in defending Bermuda’s position.
“As the Minister of Finance [Bob Richards] has said, if you want to evade your home jurisdictional taxes, you won’t be able to do it in Bermuda. If you want to establish a shell corporation, Bermuda isn’t your desired home, either.
“By the summer, Bermuda will have a ‘head office’ requirement for commercial insurers that makes it doubly clear that economic substance must take place in Bermuda insurance operations. Other Caribbean domiciles have 30 times the number of corporations that Bermuda has — establishment of corporate shell companies has never been Bermuda’s focus and international trends make it clear it won’t be in the future, either.”
Mr Kading indicated that the Bermuda economy positively affects Britain. “ABIR members have more than 5,500 employees in the UK,” he said. “According to the London Market Group, Bermuda is one of the three largest reinsurance centres in the world and one of the eight largest commercial insurance centres.
“But the jurisdiction’s success is also tied to the reputation of the Bermuda Monetary Authority as a robust insurance regulator and the Government’s reputation as being a co-operative jurisdiction on tax law enforcement.”
Ross Webber, the chief executive officer of the Bermuda Business Development Agency supported that view. “Bermuda supports the G20 in its efforts to tackle corruption, tax evasion, terrorism financing and money laundering,” he said.
“Once UK electioneering is concluded, it will be important for British policymakers and business leaders trading in all of its territories to work together to build on the progress to date in curbing financial crime, and safeguarding the economic success of Great Britain. For UK and British territory relations, a good starting point would be to distinguish between those jurisdictions that comply with global standards — such as Bermuda — and those that do not.”