Costa Rica is my haven what the taxman needs is a dose of helpful competition
CHRISTOPHER FILDES
My tax haven of the year is Costa Rica. Birds, beaches, rainforests, a railway system in need of revival, and a special deal for visitors who bring an income with them. They become resident rentistas and their income is untaxed. Livelier than the Pitcairn Islands (pleasant sub-tropical climate, no income tax, total population 42, a boat calls occasionally) and warmer than Spitzbergen (4 per cent income tax, pitch dark for four months of the year, problems with polar bears.) Ingushetia is a new haven, developed by Russia, but it is too close for comfort to Chechnya and not recommended. Pick your own from the choice of 140-odd listed in Caroline Doggart's magisterial Tax Havens and their Uses (i95 from the Economist Intelligence Unit, but it could easily pay for itself) and remember that the world's high-tax countries are after them. The European Commission has struck out against what it calls harmful tax competition. The Organisation for Economic Cooperation and Development, which lives free of tax in Paris, declared that harmful tax competition was 'an emerging global issue' and published a blacklist of 35 jurisdictions that practised it. Some of them found themselves charged with money-laundering — as if there were no difference between a haven and a laundry.
Fiscal paradise
THE high-taxing governments wrap themselves up in a cloak of morality, but the fact is that they are suppliers of services, enjoying local monopolies, and financed by their taxpayers under compulsion. No wonder that they resent tax competition and gang up against it. They like to call it 'harmful' but to everyone else it is helpful. Competition, the customer's ally, is what keeps suppliers up to the mark. How much more happily they would get together in a corner and, as Adam Smith observed, conspire against the public and raise prices — or taxes. Our own dear government, which takes all our income every year from New Year's Day to Derby Day, is obviously itching to take more. This is the month when we write large cheques to the taxman, and I am not consoled to reflect that this country is, in Caroline Doggart's book, a fiscal paradise — not for its citizens but for such foreign residents as American bankers, Greek shipowners and the proprietor of Harrods. For their custom, governments have to compete.
Eurobrabazon
I AM sure that the A400M aircraft will be up to date when it flies, if it does. It looks rather old-fashioned to me — a big fat wind-up job which might have been developed from the Bristol Brabazon — but it has been on the drawing-hoard for 15 years so far. This is the European Military Transport Aircraft, a joint venture which is meant to cost £12 billion and has the Germans stretching to pay their share. They are up against the permitted limits of their budget deficit laid down by the Stability and Growth Pact, which derives from the Maastricht treaty and is meant to shore up the euro. The German government plans to get round this by signing the order now and paying later — deferring it to next year's budget, on the other side of the election, when it may be someone else's worry. So long as nobody passes the hat round for the Eurofighter, which costs even more than the transport aircraft, they should be all right. These joint ventures have been so long in the making that the prospective enemy has changed or vanished, so that it is no longer apparent what warlike purpose they serve, but they provide employment and, in their way, show what Europe can do.
Squire insurance
HOW not to insure a tower block: assemble a few thousand squires from the shires and let them run the risks. They would trade, each for himself and not one for another, in a club which had a shelf-life of a year. This annual joint venture would then be wound up, the books would be closed two years later and the profits, if any, distributed. The squires, who would be called 'names'. would supply their own capital, and accept unlimited personal liability if the tower block fell down. They would sell their pictures and hunters and write cheques for billions of dollars. Every year a new club would be formed and the process would start again. This is how Lloyd's of London did business for more than three centuries, making it one of those quintessentially British institutions which are supposed to be so much admired that no one copies them. It no longer makes sense and Lloyd's ruling council has finally said so.
Nuisance value
THE trouble is that Lloyd's tends to reform itself only when it is sufficiently frightened. It has been losing market share for years, and money, too, but the collapse of the towers in New York has sent premiums soaring, and the surviving names have been told by their trade union, the Association of Lloyd's Members, that happy days are here again. Some Lloyd's professionals still make a good living as the names' agents, and have resisted reform before now, seeing off a prospective chairman who wanted to do away with the annual joint venture. By now, though, fewer than 2,500 names are still underwriting, and all that remains is to put a price on their nuisance value.
The Fleming show
ROBERT FLEMING came from Dundee and the family bank that he founded was true to its ancestry. A piper skirled in the atrium, the office pub was called the Scottish Pound, and when one of the directors, David Donald, wanted to buy pictures for the walls, he was told that they must be by Scottish artists or show Scottish scenes. In the end they were rated the finest private collection of Scottish art in the world. Two years ago Chase Manhattan took the bank over, the piper was stood down, the collection was sold to a charitable foundation endowed by the Fleming family, and now it is to have its own art gallery. On Tuesday of next week the Fleming Foundation opens its doors with a show of The Glasgow Boys' (of the 1880s and 1990s) and will stage new exhibitions every three months. The gallery is at 13 Berkeley Street, London WI; open from Tuesday to Saturday, admission free. It is a notable benefaction on the Flemings' part, and we must hope that the piper is optional.
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