From Nigeria News Pro

In the last year, global inequality has widened alarmingly; 62 people now own the same as the poorest half of the world’s population, with an estimated £7.6tn of global wealth held in offshore accounts. It’s been estimated that – perfectly legal – tax avoidance (via many routes, not just tax havens) keeps £20bn a year out of the Treasury. Which turns out to be the exact amount pencilled in for cuts to our schools, hospitals and other services over the next four years.

The Cayman Islands is the most notorious tax haven on earth, but wants to show the world it has got nothing to hide. So, it opened its doors to me. Here are 10 things I learned while making a TV documentary about the place.

1. It’s the same size as Bognor and more British than Britain
Cayman is 4,500 miles from the UK (an hour’s flight from Miami and Cuba), but it’s as if you have stepped into 1950s Britain, with a governor wearing a big hat presiding over garden parties. The day I arrived, the whole island was celebrating the Queen’s birthday – as it does every year – with a full military march, followed by tea and sandwiches, in 32C heat.

2. Fish fingers cost £8.50 – because no one pays tax

Opening a post office box in George Town, Cayman Islands. Photograph: Jan Greune/Getty Images/Look
It’s not just big corporations that pay no tax here. No one does. I met a cheery cabbie called Hyacinth, with flowers and a bible on the dashboard, who was very pleased with the setup: “We’re tax-free, darlin’!” So how does the island pay for itself? By taxing everything else. I saw what this means in the supermarket. A packet of fish fingers costs £8.50 – which is affordable if you’re a billionaire, but if you live on a modest income, this form of indirect taxation means you’re no better off than if you lived in the UK.

3. It’s ‘not a tax haven’
No, really. The premier, Alden McLaughlin, told me. It’s an “international finance centre”. Cayman is keen to clean up its image, which could be why they let me in. Cayman is in fierce competition with other international finance centres: Switzerland, Hong Kong, Luxembourg, the US state of Delaware, and, of course, the City of London itself.

Tax havens might once have got away with being dodgy, when no one was poking around, looking for corruption, but in 2016, it’s bad for business. If Cayman can beat rival IFCs and bag a global corporation such as Facebook, that is far more lucrative than taking money from a Colombian drug lord or a corrupt football official.

4. There are twice as many companies as people
The main work on this Caribbean island is not fishing or tourism, but financial services. Hundreds of accountants and lawyers are squirrelled away in big glass buildings in the capital, George Town. Chickens peck around their parked Ferraris, a stone’s throw from Seven Mile beach.

When Barack Obama criticised tax havens, he singled out one building on Cayman, Ugland House, which he claimed housed “12,000 corporations. Now, that’s either the biggest building or the biggest tax scam on record.” But Obama got it wrong – there are closer to 20,000 companies registered there, and 100,000 companies in Cayman as a whole. They include ones linked – or that have been linked in the past – to a bewildering array of British household names: Tesco, Sainsbury’s, BP, Manchester United – even the National Grid. In total, Cayman is home to nearly twice as many companies as people. Which is odd, because when I went to find them, there wasn’t much physical evidence of their presence. But they’re here all right, on paper.

5. Blame Tom Cruise for Cayman’s bad image
Tom Cruise in The Firm, the film that gave the Caymans their reputation for shady dealings.

Tom Cruise in The Firm, the film that gave the Caymans their reputation for shady dealings. Photograph: Allstar/Paramount
Back in the 60s and 70s, Cayman’s proximity to Miami and Cuba made it a handy drop-off point for money laundering. Bags of cash would be pushed from passing planes on to the beach. As a result, Cayman became handy movie shorthand for “shady”, exemplified by Tom Cruise’s lawyer in Sydney Pollack’s 1993 film, The Firm.

According to the island’s No 1 estate agent, the affable Michael Joseph, who showed me the plushest properties on the island from his boat: “You can almost predict exactly in a movie when they’re going to say: ‘We’ve gotta wire the funds to the Caymans.’ I mean, please.” (Though Joseph does himself no favours by owning a dachshund called Pablo – named after Pablo Escobar.)

Cayman is defensive of its image, and Jude Scott, the man who speaks for its entire financial industry, says attacks are “politically motivated” by competitors. To some degree, Cayman is a useful punchbag, one that deflects attention away from the fact that corporations pass their profits through a complex web of subsidiaries in many different countries.

6. Not everyone who lives there is rich
The millionaire lifestyle is very visible – I was shown around in speedboats and Ferraris. But many on Cayman live in poverty. Hell is a small town at the northern end of the island that gets its name from a weird volcanic rock formation. It’s also where many of the poor live. Tourists can even buy a T-shirt: “I’ve been to Hell! And survived!” And just as in London, some of the poorest people live directly in the shadow of the glass banks in the heart of the George Town financial district.

7. Britain could end up like Cayman
The Cayman Islands don’t have the same level of welfare support as us – the state is about 20% of the economy; it’s closer to 40% here. I met Emily, a retired civil servant living in a house full of damp and mould. With a £1,500-a-month mortgage – twice the UK average – she was unable to keep up payments. I met her when she was on the verge of eviction and relying on a Christian charity to find her a place to live.

This might sound like new Victorianism in the sun. But in Britain, George Osborne has pledged an unprecedented reduction in the state over the next five years that means we could all be facing a future that looks like Cayman does now.

8. We made Cayman what it is, in the hope of trickle-down
It’s the 1960s: the empire’s over, and British colonies face a choice. Many, such as Jamaica, go independent. But Cayman chooses to remain a dependency. And Whitehall has a plan for it.

Civil servant John Cumber was ushered into the Foreign Office, shown a dot on the globe, and told: “You’re going there.” During the 60s, a raft of legislation was passed that was designed to help Britain muscle in on the financial services that countries such as Switzerland had been supplying the super-rich for decades. The cunning plan was that we in Britain would see the benefit flow across the sea to us. It didn’t quite turn out like that.

9. Offshore means more than you think
Jacques Peretti tries to mingle with the movers and shakers of the Caymans.

Jacques Peretti tries to mingle with the movers and shakers of the Caymans. Photograph: Johann Perry/BBC/Chalkboard TV
In corporate terms, “offshore” means a place where companies do business. It’s how global capitalism works. Suppose a Japanese company and an American company want to do a deal. In Japan or America, they would pay tax, but if they do it in Cayman, through a holding company – ta dah! – no tax!

But here’s the other meaning for offshore: when it comes to who has got ultimate responsibility for Cayman, that’s offshore, too. Cayman says it’s London, and London says it’s Cayman – which is quite useful when someone annoying like me comes along, asking who’s in charge. No one is. Or perhaps it’s the fish, offshore.

10. We, not the government, could now be to blame
The consequences of not dealing with tax havens could be dire, according to Washington tax analyst Matt Gardner. “The heart of our social contract is tax revenues. Undermining that long term makes it impossible to provide services. If developed democracies decide this is a model they want to pursue, I think they’re going to be disappointed pretty fast.”

We, as consumers, are implicated. “It’s very easy for us to focus narrowly on the little benefit we get from buying cheap goods online,” Gardner explains, but “we have no way of evaluating the long-term impact it is going to have on services, on ourselves, on our own tax load, and I think that’s the way the companies like it.”

The zero-sum game is not between Cayman and “doing something”, but between the cheap services we enjoy as consumers and how we fund our schools and hospitals in the future. Something has got to give.

Britain’s Trillion Pound Paradise is on Friday (22) at 9pm on BBC2.

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