1. A tide coming in faster than a galloping horse : tax haven islands and rapid complex constant change Dr Mark P Hampton University of Surrey

2. Presentation Outline l RC 3 and tax haven islands l Why is RC 3 significant for islands?

3. RC3 and tax haven islands Scale of offshore & tax havens: 70 tax havens holding $11 trillion 25% world money supply offshore 50% gross value world trade via tax havens Most tax havens in small islands Offshore finance since early 20th century

4. BUT Since late 1990s unprecedented sequence of international initiatives: OECD; IMF; G7's FATF & FSF; EU; UN; national governments RC 3 (Rapid Complex Constant Change)

5. 'Four spaces' (Hampton, 1996b) as organising framework for RC 3 l Regulatory space l Fiscal space l Secrecy space l Political space

6. The Four Spaces and RC 3 Regulatory space: G7's FSF 2000 rankings IMF inspections UK official reports (Edwards, 1998 & KPMG, 2000)

7. The Four Spaces and RC 3 Fiscal space: OECD harmful tax competition 1998 Irish Revenue success EU information exchange & withholding taxes

8. The Four Spaces and RC 3 Secrecy space (money laundering): G7 s FATF (post 9/11 re-energised) UN Program against Money Laundering Political space

9. Why is RC 3 significant for island tax havens? Cost of new regulation & enforcement Lack of personnel & structures Overloads island government systems Creates uncertainty & pressure on decision-making Is the impact of RC 3 a function of smallness of islands?

10. Why is RC 3 significant for island tax havens? Links to dominant industry & capture of state by OFC? Exacerbated - islands believe own PR? Different narratives: official narrative how islands are in control of their OFC Vs. Reality of dominant tax haven industry & its global agenda

11. Conclusions l For tax haven islands - how to cope with RC 3 (or manage) external shocks? l Trends? l Binary - Functional OFCs & Notional OFCs: â Functional OFCs - complain but comply â Notional OFCs - ignore & risk it

12. Conclusions l Football (soccer) analogy: Premiership clubs vs. Saturday morning amateur league!

13. And Finally: l Growing civil society response to tax havens l Changing perceptions from broad tolerance to active campaigning against tax havens (Tax Justice Network, AABA, Attac) Are the golden years over for tax haven islands?

14. "What would we do instead? If the OECD closed us down, we would become depopulated and derelict." John Cashen, Chief Finance Officer, Isle of Man

15. "Offshore exists but they see it as a bad thing. If the OECD stopped imposing penal taxes on their own citizens, we wouldn't exist. That's all they need to do. They'd solve the problem. They're so-called capitalist countries imposing socialist rates of tax on their own citizens. It's more or less a human rights issue really." Isaac Legair, Director Financial Supervision Unit, St Lucia

16. Thank you Dr Mark P Hampton University of Surrey mark.hampton@surrey.ac.uk