GEORGE TOWN, Cayman Islands – Cayman’s financial services minister has dismissed as absurd the suggestion by U.K. leader of the opposition Jeremy Corbyn that the British government should consider imposing direct rule on its overseas territories and dependencies if they do not comply with U.K. tax law.
Corbyn was reacting to a massive leak from Panamanian law firm Mossack Fonseca, which had registered more than 100,000 secret firms in the British Virgin Islands.
Lumping all the British overseas territories together, Corbyn argued that the government should tell their governments: “Hang on, you are a government of a British dependent territory, a Crown territory, you must obey UK tax law, you must not become a harbour for tax avoidance and tax evasion.” He added that direct rule could be done “almost immediately.”
“To suggest that a democratically elected government that is committed to transparency and good governance and which has demonstrated excellent results so far by the usual metrics, should be displaced by the suspension of a constitution adopted by the people is simply incomprehensible,” Financial Services Minister Wayne Panton said in response to the idea. “There would be no justification for such a draconian action.
“In fact, rather than generating additional tax revenue, such a move might create a multi-billion pound annual liability for the UK taxpayers in respect of Cayman alone. I cannot imagine they would welcome that,” he added.
The UK has in recent times imposed direct rule over one of its overseas territories, the Turks and Caicos Islands, after an inquiry found evidence of systemic corruption among the ruling elite. The islands’ autonomy was suspended in August 2009 until ministerial government was restored after elections were held in November 2012.