Government senator Noel Sloley has called on the Patterson administration to set up Jamaica as an offshore financial centre and tax haven - an idea that JLP leadership aspirant Bruce Golding says that he is already studying.

"I have asked a team to examine a specific set of proposals including the risks of things like offshore universities, offshore recuperative facilities and financial centres including the resources required to establish them," Golding told the Observer yesterday.

Sloley made his suggestion in a Senate speech on Friday in which he also urged the government to free the tourism industry from paying taxes, arguing that it would stimulate greater investment and growth in the sector.

The offshore financial centre and tax haven suggestion comes only a a week after Prime MInister P J Patterson's own proposal for the transformation of Sloley's home town Montego Bay, on Jamaica's northwest coast, into an international business centre.

"As night follows day, so you are going to have rich people," Sloley said in his Senate speech. ". The wealthy want financial centres with low taxation to preserve their wealth. They are going to find these shelters somewhere."
Jamaica, Sloley argued, could be one such location, but noted that the issue was one that required the agreement of both sides of the political divide in order to "find a way to start our people marching to the promised land".

Asked by the Observer to expand on his proposal, Sloley gave a conceptual summary. He said that based on "the high level of interest payments by government to Jamaicans for money loaned by them to the government", it was clear to him that the "capacity existed to create a sheltered state to generate a pool of resources, part of which could finance major sustainable development projects".

He noted that such a concept fitted into Patterson's proposal for Montego Bay, which is already at the heart of the country's tourism industry.

That city already boasts communication assets such as the privatised and upgraded Sangster airport, already utilised by Air Jamaica as an international hub. It is also the major centre for information and communications technology (ICT), hosting several companies offering back office services to major American firms.

Moreover, Sloley noted Jamaica last year attracted over $700 million in foreign direct investment and this, combined with the high amounts of loan funding that Jamaica is able to source internationally, was proof that there was enough confidence in the country to attract offshore deposits.

"For years and years we have quite rightly talked about protecting the poor. Let's start talking about making people wealthy," Sloley said.

He, however, did not address the issue of pressure placed on offshore banking jurisdictions - including several in the Caribbean - by the Organisation for Cooperation and Economic Development (OCED) to open up their banking secrecy and tax shelter laws so that they are more penetrable by foreign investigators.

Ostensibly, the aim is to prevent money laundering and other financial crimes, but small offshore banking jurisdiction say that pressure from the powerful countries of the OCED undermine their competitive advantage.

The actual mechanics of the offshore scheme would, however, have to be worked out by the experts, the senator said.

In his senate presentation, Sloley also said that if Jamaica were to develop tax shelters and combine it with a lower income tax rate, it could spur the repatriation of some of the billions of dollars held by Jamaicans in the banks of Miami, Cayman and the Bahamas.

"We believe that the key to increasing foreign direct and local investment is a combination of the highest before tax return, with the lowest and most certain corporate tax rate for a non-tax haven. This should be combined with the best, easiest and quickest value for money legal system, regulatory environment and government services in the region," he said.

Golding, the front-runner in the race to be the next leader of the Opposition Jamaica Labour Party, said he hoped to develop a clear position on the financial centre/tax haven issue within a month.

On the proposal for a tax-free tourism sector, Sloley said that tourism should be granted export status and all taxes and duties on its capital inputs and operating materials would be waived. Income to the government coffers would flow from tax derived from profits, although he said profits should be tax-free for specific periods.

"This would mean giving to the land-based hotels what the cruise industry currently enjoys and leveling the playing field," he said. "Tourism could then take off and grow to a point where our annual arrivals could be several times our population."

His comments come against the background of record investment in the sector which is slated to see the construction of between 5,000 to 7,000 new rooms over the next five years.

The senator also endorsed calls for the introduction of properly regulated casino gaming to broaden the scope of entertainment in the sector. If done correctly, he said, casinos could attract additional investment, visitors, and contribute additional taxation revenue to the government.

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