Notes From The Margin

July 24, 2007

Tax Haven??? or not?

Mr. Harper has come and gone, (if you blinked you might have missed it) and most of the media furore seems to be about a very mild exchange between Mr. Harper and Mr. Arthur on the role of Cuba and the potential for a free trade area. The much anticipated (by me anyway) fireworks about tax havens just never happened.

 

However in the local media there seems to have been an expansion on Barbados’ position in today’s Nation:

“We have sought to be principled in our relationship with Canada to avoid having our jurisdiction used as a place where people defraud the Canadian treasury,” said Arthur as he concluded the Press conference at Sherbourne Conference Centre. (snip)

…In this context, Arthur added: “We recognise that it is as much to Canada’s benefit as it is to ours, and we would not allow our jurisdiction to be used for the purposes of defrauding Revenue Canada.

 

“And the relationship that we will put in place, Mr Prime Minister, is such that if there are aspects of the treaty that we need to review to make sure that the objectives of a mutually beneficial relationship are enshrined and sustained, we are prepared, in the spirit of friendship and in the spirit of constructive engagement, to be so resolved.”

Historically Barbados has always run a relatively clean offshore jurisdiction. While the country’s offshore insurance company’s have flourished, the offshore banking sector has remained relatively stunted because the banks are subject to inspection and regulation by the Central Bank of Barbados.

Mr. Arthur and Mr. Harper walk a fine line here, the real reason offshore financial centres exist is because of high taxes in the metropolitan countries. If Mr. Harper squeezes too hard, he runs the risk of pushing Canadian businesses offshore, or making them less competitive with the rest of the world. If Mr. Arthur digs in his heels too much he runs the risk that Canada might walk away from the treaty all together. It will be interesting to see how this issue is resolved.

Marginal

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