UK is the addict – to high taxes

Financial Times
6 October 2009

From Mr Anthony B. Travers.

Sir, I cannot be alone in noting the irony in the UK financial services  secretary's comments quoted in the article "Tension  eases as London backs Cayman loan" (October 1). Indeed, the basis for the  inadequate nature of the UK government's response to the European Union's attack  on the City of London under the alternative investment funds directive is well  described by the thinking that underlies Lord Myners' grimly ill-conceived  metaphor that offshore financial centres, like addicts, should be "weaned off  tax if that is the only source of competitive advantage that they offer".

Lord Myners needs to look in the mirror first. It is better argued that it is  the UK government's addiction to high taxes and irrelevant regulation that is  causing the diminishing benefits to the UK Treasury, and indeed if the EU  initiative is not derailed, UK taxable income will decline further and  Chancellor Alastair Darling's woeful projections will look increasingly  optimistic.

Rather than the drug-crazed one-trick ponies Lord Myners suggests, it is the  comparative clarity of a superior legislative regime, an indirect tax system and  a relevant regulatory approach that is the cornerstone of the Cayman financial  model. No Cayman financial institution has failed, and Cayman continues to  experience net inflows of business.

Throughout the financial crisis the Cayman debt to gross domestic product  ratio has been less than 30 per cent of the real UK figure. The Cayman budget  today will again be balanced. Perhaps there is a message here to those with  clarity of thought. Lord Myners: do get the metaphor straight.

Anthony B. Travers, Chairman, Cayman Islands Financial Services  Association