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Issue #1773      April 12, 2017

Gibraltar: the EU’s tax haven

Gibraltar is making headlines again in Britain, following a couple of years of silence. The last time such a furore was kicked up over the overseas territory was when Labour’s then leader Ed Miliband warned it – along with other British possessions – that if he won the election in 2015 it would have six months to compile a public register of offshore companies to assist a clampdown on tax havens, or face “international action.”

From a guide of Gibraltar targeting children.

That didn’t go down any better with Chief Minister Fabian Picardo than last week’s mention of the Rock by European Council president Donald Tusk has.

Tusk’s statement that no EU-British agreement would apply to Gibraltar unless Spain gives it the green light has prompted the Tories to threaten a Spanish equivalent of the Falklands war, while Picardo accused the EU chief of behaving like a “cuckolded husband taking it out on the children”.

“Gibraltar belongs to the Gibraltarians and we want to stay British,” he declared.

It’s a bit rich for the foreign secretary who helped launch the entirely unprovoked invasion of Iraq to accuse anyone else of “19th-century jingoism,” but Jack Straw is right that Gibraltar’s British status is seen as an affront to Spanish sovereignty by most Spaniards, and right that threatening military action is “frankly absurd.”

British nationalists assert that the right of Gibraltar’s residents to stay British is a matter of democratic principle, and there can be no doubt that the vast majority do want to remain subject to Britain.

The most that can be said for this argument is that it beats basing our claim entirely on the 1713 Treaty of Utrecht, when the enclave was ceded to Britain “in perpetuity” in return for London abandoning its campaign to replace a French king of Spain with an Austrian one.

In some respects politics has moved on since those days. Gibraltar’s population may wish to be British, but overseas territories whose wealth depends on companies using them to avoid tax due elsewhere do not have an inalienable right to keep doing so.

Picardo has always rejected the charge that Gibraltar is a tax haven, but look at the facts: this tiny strip of land has more registered companies than households, including 8,464 offshore companies – not bad for a population of just over 30,000.

As Britain’s former ambassador to Uzbekistan Craig Murray points out, over a tenth of the workforce is employed in the online gaming industry, based there purely to avoid taxes, and the territory imposes “no inheritance tax, no VAT, no capital gains tax and low income and corporation tax.”

Tax advisers Darwin Tax describe Gibraltar as “the tax haven of the European Union” and assure clients: “A Gibraltar company which is owned and controlled by non-Gibraltar residents is not subject to Gibraltar taxation.

“The non-resident status of the company is supported by the Gibraltar Companies Ordinance. If such company does not carry on any trade or business in Gibraltar, all taxes are avoided.”

As the only “offshore centre” which is actually part of the EU, Gibraltar is uniquely attractive to capitalists who need their companies to be registered in the EU but also want to avoid their obligations to any of its member states. The losers are the citizens of Spain, Britain and other countries whose treasuries miss out on taxing the profits of companies that operate in their territories, employ citizens they educated, use their infrastructure and sell in their markets.

Whatever differences socialists may still have on the EU, it should not be hard to agree that Gibraltar’s tax status is an anti-democratic disgrace.

It should be brought to an end, along with the anti-social privileges granted to corporations in the rest of Britain’s network of offshore tax havens.

Morning Star

Next article – Feminist occupation of Cheltenham Rd Library

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