Today came the news that the appeal lodged by the governments of Jersey and Guernsey against the UK governments decision last year to close the VAT loophole (LVCR) has been lost.
For the hundreds of Channel Islanders that may face losing their jobs, this decision is catastrophic and my heart goes out to every single one of them and I hope that something is done to mitigate their circumstances as much as possible.
However, the politicians of these islands are using this event as a massive smokescreen and are whipping up an anti-UK sentiment that I just cannot let go unchallenged because it is diverting attention from making legitimate criticism of the way the Jersey government has behaved.
Firstly, I'll get this out of the way - I am not, nor have I ever been, nor will I ever be, proud to be a Jerseyman. Dr Johnson said that "Patriotism is the final refuge of a scoundrel" and I owe no allegiance to a geo-political entity. I only ally myself with ideas and moral principles. I can't be proud of being accidentally born on one piece of rock rather than another. And so accordingly, when Jersey is criticised, I have no urge to instinctively defend her without further thought. I'd try and be objective and look at the criticism being made and decide if it is justified or not before defending Jersey.
In the case of the VAT loophole, I'm sorry to say that Jersey is in the wrong.
The rule on VAT was that if you imported goods into the UK worth less than £15, you wouldn't have to pay VAT. This was called LVCR - Low Value Consignment Relief. It made a lot of sense at the time because the amount of VAT that would be paid would be minimal and difficult and expensive to obtain. It also created bureaucracy that was bad for people (the majority at the time) who were importing perishable goods like veg and flowers.
Then a problem arose - the internet. Some bright sparks got the idea that you could set up websites to sell CDs and DVDs at under cut prices. These were Jersey companies that started to do it, so there wasn't really a problem there. Until some UK companies decided to set up subsidiary companies and locating their warehouses in the Channel Islands. Naturally, this wound up the UK government.
So at the end of last year, as one of many things the current coalition government (who by the way, I am not a fan of) are doing to tackle to deficit, they decided to end this tax loophole. And the States of Jersey instinctively got defensive and decided to appeal the decision and today we found out that the appeal has been resoundingly lost.
Arguments against this decision have been made about how it is unfair (and not legal) to discriminate against the Channel Islands this way and that it's just another typical example of the UK taking advantage of our poor little islands.
But this is just a nonsensical argument. Why would the UK waste time and resources tackling other countries which are not currently causing a problem to the UK? The Channel Islands are the main centre of this problem for the UK and so it is totally natural that they would make the islands a top priority. And the argument that was brought forward in court today that it was not right to discriminate against the islands was dismissed by Justice Mitting who said that the UK government ministers had won the argument "handsomely" and that there was no legal requirement whatsoever for the UK to treat every jurisdiction the same. Which makes me wonder what sort of dodgy legal advice our government was getting...
What Jersey needs to just get over, is the fact they even though it is an island in the literal sense, it is not an island in the metaphorical sense. Jersey just can not get by ignoring the rest of the world and in particular it's closest neighbours geographically and economically. Allowing this business to go on in a way that was not intended in the original spirit of LVCR was always going to annoy the UK government because it deprives them of a considerable amount of taxation and creates unemployment there. You may say, but it will create unemployment in Jersey, and yes that is true, but that's not the responsibility of the UK government, it's Jersey's problem.
The UK can and will tackle any jurisdiction that it feels is abusing the VAT loophole and will get them in turn. The Channel Islands are not being discriminated against.
But what our government has to answer for is the pathetic way they have handled this, and trying to fool the masses into a state of fear. Anyone with half a brain cell could have told the government that their appeal against this decision was doomed from the start and a total waste of time. This escapade has cost the Channel Islands governments £400,000, plus half of the fees of the UK governments lawyers. This has cost us a pretty penny when we just cannot afford to be wasting money. At a time when public sector workers are facing a pay cut and all States departments have been told to make savings, why have we wasted money on something so futile?
Here's why - The Jersey government is desperate to divert attention away from their own failings and thinks that if it can pretend that this is the UKs fault, islanders will rally behind the Jersey government opposed to the UK government and we will avoid scrutinising the Jersey governments actions for fear of being labelled a traitor. That is what this is about. It's not about saving jobs (because even without this business the States have done a terrible job at stopping rising unemployment) it is about creating a scapegoat for the terrible direction the economy is headed in to save their own political backsides!
Now, I feel for every single person that may lose their job because of this and I wish that something happens and they are all looked after. But Jersey has a habit of predicting doomsday to scare people, and these exaggerations usually prove to be wrong. Many of the companies like Play.com have developed excellent reputations over the past few years and there is every chance that people may not run away from these companies just because they have a habit of going there.
So lets try and be objective and rational about this before jumping on any bandwagons!
I wonder how long it will be until Senator Bailhache uses this as an excuse to advocate Jersey's independence from the UK?
Until next time comrades,
Some interesting reading -