Lax on Tax

‘Germans are obsessed with paying taxes – they are affronted by any state with little or not taxation – such as the British Virgin Islands’

European Eye Taxation

“So, you’ve crossed over to the dark side,” my friend remarked with a sneer, and for a moment I thought he was referring to the delicate tan I was sporting, which clashed somewhat provocatively with the pale skies of a wintry Berlin afternoon. “Why would one go to the British Virgin Islands and support a tax haven thousands of miles away?” Here we go again, I thought to myself as I waited for him to unleash the familiar marriage of eco-consciousness, europhilia and Protestant concern for an individual’s duty to support the nation state, which has become fashionable among many Germans of my generation. But he went further: “A place like that epitomises all the evils of our time,” my friend continued ecstatically, “it’s beyond postcolonial! Just take the offshore businesses.”

Now, it has to be said that Germans have a complicated relationship with anything with a whiff of empire about it. Some are, at least culturally, closet colonialists, but the majority (including more conservative types) have considered that chapter of history a particularly grim one, especially since the Falklands War. At the time, it was virtually impossible to find someone among the intelligentsia who supported Thatcher’s actions.

The word “colonies” has a strangely foreign, if not distant ring to German ears, as if belonging to a past that one longs for but isn’t quite allowed to indulge in. One reason is that colonialism in Africa, the Pacific and China came relatively late to the German nation state and didn’t prove particularly successful, but the real issue at stake — without wanting to sound too Freudian — is a discomfort when encountering the thin line between executing power and using it as suppression. This sentiment (if there is such a thing as a collective sentiment, as cultural theorists claim) has been put to the test in the ongoing euro crisis with Germany in the spotlight.

Considering this, my friend’s words didn’t seem too strange. The thought of a new kind of colonialism had occurred to me too when, a few weeks before our meeting, I landed on the aptly named Beef Island. The scenery was pure Dr No, all turquoise waters and white beaches with the occasional propeller plane taking off over a lush field of seagrapes or mango trees. With some quaint colonial quirks — such as stubbornly continuing to drive on the left or the rather grand sounding but dismal looking Queen Elizabeth bridge that connects Beef Island with the main one, Tortola — it seemed like the perfect setting for dodgy business. The peculiar mix of drop-outs and expatriates gulping down their beers as soon as the sun set while complaining about the locals forever being “on island time”, that is slow and at times snobbish when dealing with expats, added to the atmosphere of languid aggression. The islands make up one of the largest offshore corporate domiciles in the world — no wonder, since corporations can be registered within a few working days, offering the utmost privacy for the owners and shareholders. The main appeal however is, as one company put it bluntly: “According to BVI Business Companies Act of 2004, the BVI business company is exempted from all taxes.”

Now, Germans are notoriously obsessed with paying taxes. The Protestant sentiment that it is good for the Sozialstaat to have as many contribute to it as possible is affronted by any state with little or no taxation. Recent steps by the UK to discourage contractors from using offshore banks  couldn’t really do much to change that perception or went unnoticed: as did the fact that HM Revenue and Customs had just announced the launch of an offshore unit for tax fraud.

Surely the structures that allow for these kinds of business — whether you call them an invitation to fraud or common practice among the world’s biggest companies — will be reduced and perhaps closed down altogether as soon as the European Union can no longer afford to have taxes go anywhere but to the respective state the company is based in.

But should the line between legal and illegal — and moral and immoral — be redrawn in the current climate of postmodern Robin Hood-ism? To me, it seems as if the old claim “marginality is a site of resistance” which theorists of postcolonialism have mulled over for so long is facing a new test. Europe thinks it can no longer afford to exclude these ungoverned spaces — even if they are just a few small islands scattered in the Caribbean. Why? Not because of outrage or a feeling of moral guilt in the West, but because of sheer economic necessity. This means a change of mindset and rhetoric too: “offshore” no longer means “off limits”.