Moves to stigmatise wealth planning by 'tax fundamentalists' and restrict capital movement through attacks on offshore jurisdictions will ‘significantly' reduce overall economic activity, according to Jersey Finance.
The combined effect of protectionist measures will constrict wealth, reduce tax bases and lose global prosperity if programmes driven by a "short sighted grab for tax" are pursued, says Geoff Cook, chief executive of Jersey Finance.
The Organisation for Economic Cooperation and Development (OECD) also recently slammed the notion of protectionism in respect of tax competition.
"We agree on the need to avoid raising new tax obstacles to cross border trade and investment," it says.
Cook believes any attempted tax grab will miss its target, as even if discretionary measures are introduced, they will not see universal adoption.
"Like water, the flow will follow the course of least resistance, with mobile capital moving eastwards as the USA and Europe lives with the outcomes of the unintended consequences of financial services protectionism."
Cook says utilising tax free savings allowances, paying into a pension or trading a few shares within a CGT limit are tax avoidance, as without taking these planning measures, people would pay more tax.
"To accuse companies or individuals of illicit or immoral behaviour because they plan their international affairs in perfectly legal and sensible ways simply raises the spectre of wrongdoing in a misleading manner," he says.
Cook hits back at claims from "tax hobbyists" claiming billions is being misappropriated through international finance centres.
"These claims have no credible evidence underpinning them...This pure guess work is simply a convenient fiction designed to mislead and incite opposition," he says.
The calls of "tax fundamentalists" may appear compelling, but Cook warns there is no pot of gold to be "grabbed" and such a move could weaken the already embattle banking sector as capital takes flight to friendlier shores.
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