1. Tax competition: lower taxes means less poverty Richard Teather Bournemouth University

2. Tax competition “Tax competition brings great benefits, to all society and not just to those who directly take advantage of it” The Benefits of Tax Competition

3. Tax competition the use by governments of low effective tax rates to attract capital or business activity

4. Benefits of tax competition  taxes =  wealth

5. Benefits of tax competition  taxes =  wealth encourages entrepreneurship encourages savings & investment encourages work

6. Benefits of tax competition  taxes =  wealth “Growth in government stunts general economic growth.” (Federal Reserve) Tax increases “result in a net efficiency loss to the whole economy” (IMF)

7. Benefits of tax competition 75 20 VAT (12) Tax (25) 38. Tax 13 NI 4 VAT 7 44

8. Benefits of tax competition  taxes =  wealth efficient global capital markets

9. Efficient global capital markets

10. Benefits of tax competition  taxes =  wealth encourages entrepreneurship encourages savings & investment encourages work efficient global capital markets

11. Benefits of tax competition

12. Who benefits? the rich get richer ? multinationals avoid tax ?

13. Who benefits? $100 tax $75

14. Who benefits? Cayman finance industry generates: 55% of Cayman’s GDP 40% of all government revenues 30,000 business visitors 36% of employment - 12,500 jobs

15. Who benefits?

16. Low tax characteristics Offshore finance centres vary: No taxes on income Low taxes on income High taxes but exemptions High taxes but specific treatments

17. Alternative taxes Different sectors: Vanilla banking Private wealth management Fund management Insurance Hedge funds

18. Alternative taxes Income taxes: Prevent most offshore finance Highly competitive world Mobile customer base Exemptions difficult to justify Reduces confidence

19. Alternative taxes Payroll taxes: Reduces employment Directly harms workers Discourages high-value operations Reduced to back-office function Increased ‘brass plate’ operations

20. Alternative taxes VAT: Highly complex Can’t deal with financial services Still harms finance industry Discourages flexibility Unnecessary in small economy

21. VAT

23. Cayman GDP

24. VAT Cayman GDP

25. Alternative taxes Different sectors: Vanilla banking Private wealth management Fund management Insurance Hedge funds

26. The future Tax competition is mutually beneficial embrace it Lower taxes: increase domestic economy attract international capital main benefit goes to workers

27. Tax competition: lower taxes and more growth Richard Teather Bournemouth University