Harbour, not Hideout

The rationale for Vanuatu acting as a tax-free jurisdiction is simple: Given a lack of sustainable industry, a small economic base and few prospects for international trade, tax haven status is one of the few avenues available to countries like Vanuatu to attract foreign currency. By enticing money and people into the country, the government is able to derive income from import tariffs, license fees and other activities that don’t unduly burden either investors or ni-Vanuatu.

Some degree of visible, verifiable probity is required for such a role, and cooperation will no doubt be expected from neighbouring nations as they pursue individuals playing fast and loose with the rules. But this should not be cause for alarm. We don’t want people investing here who only see the rule of law as an encumbrance.

Nonetheless, we’re facing a strong, even unreasonable backlash, which is directing itself in part at some of the punier members of the international community.

[Originally published in the Vanuatu Daily Post’s Weekender Edition.]

A prominent US liberal blog recently ran a story, titled “So Go Already” that captured in a nutshell the deep resentment that many, Americans especially, are feeling toward those captains of enterprise who continued to receive massive payouts even as the financial service companies they guided were foundering in bankruptcy.

Reacting to a rather blithe and blinkered editorial on tax havens published by the right wing Washington Times, the article ranted, “If you don’t like paying taxes here on the millions you’ve made or that someone made for you, you’re free to take your shekels and move.”

Both Right and Left utterly miss the point.

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