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RBS Economist Backs Guernsey On Right To Set Taxes

Robert Lee, Tax-news.com, London

25 October 2000

According to a report in the Guernsey press, the chief economist of the Royal Bank of Scotland, Jeremy Peat, has voiced his support for Guernsey on setting its own tax structure and resisting pressure from organisations such as the OECD, saying that not all tax competition is harmful or wrong.

Speaking to the Guernsey Press and Star, Mr Peat said he could not see a reason for harmonised taxes and said that states should be free to set the tax rates that suit their own economies and citizens. He stated: 'If Ireland wants lower taxes in some areas that’s fine. The UK has dramatically cut personal and corporate tax rates in the recent past. There is certainly nothing unfair about the way you in Guernsey set your taxes as long as that policy is prudent on the fiscal side and your regulatory environment is sound. The case you have been arguing with the OECD is a good one. What really matters is that you can show that you are running a fiscal policy which is appropriate for your requirements and you are properly regulating financial business. I think you score well on both points.'

In Guernsey to speak to bank customers about global investment trends and the likely impact of the upcoming US and UK elections on markets, Mr Peat touched on the very contentious euro issue. He is in favour of the euro and has always spoken with enthusiasm for it on previous visits to Guernsey, often in the face of staunch euro-scepticism. However, universal acceptance of the euro would push tax harmonisation forward rather than quell the sabre-rattling from Europe on the issue.

Mr Peat said: 'The euro suits the core countries and the others will just have to accept that. If it had been up to me the euro would not have started with so many countries involved. It should have started with a smaller group and then been slowly extended to the others.' Mr Peat confirmed that the Danish referendum on the euro had diminished the prospects of early UK entry and certainly that the British government would be determined to ensure that scrapping the pound was not an election issue next year.

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