Question: What are the greatest threats to individual liberties, and hence prosperity? Answer: Government-protected monopolies and cartels. And government cartels are the worst. OPEC hasn't been good for consumers – when governments get together it's usually to rip off their citizens.
The Anglo-Swiss Tax Agreement threatens to create another government cartel. This is a very dangerous precedent. There’ll soon be no corner of the world where the assets of British citizens are safe from the tentacles of HMRC.
Natural tax competition incentivises governments to keep taxes as low, and hence individuals as free, as possible. If tax rates exceed those citizens are willing to tolerate, then increased evasion, avoidance and emigration will drive taxes down. Emigration is a key point here. Giving people a way out of an oppressive tax regime keeps governments accountable, and puts some ceiling on taxes. Competition works.
Furthermore, tax competition protects the world’s capital flows from government hands and disperses capital amongst enterprising individuals who – when all is said and done – grow the economy, create jobs and increase tax revenues. Taxing capital gains is a form of double-taxation, and is a direct tax on investment. We need more investment right now, not less.
Once the agreement is implemented, enterprising individuals will emigrate further away from Britain and just move their assets elsewhere. 34% of capital squirreled away in Swiss accounts looks attractive, especially when £125bn apparently awaits taxation. But the fact is that Switzerland only starts handing over the cash by 2013, by which time many will have already transferred his or her money to Singapore. It’s an anti-growth, unenforceable agreement. What is the point?
