Low wage tax haven? Worked for Singapore

You have to pity those poor Spaniards. As propitiatory sacrifices to euromoloch, their unemployment rate remains stubbornly around the 18 per cent mark a full decade after the financial crisis, and most of their young people now seem to be making lattes for Londoners. In Britain, we complain about the poor Iberian harvest leaving supermarkets bereft of tomatoes, but has anyone stopped to think how this shortage will hit La Tomatina? Ritually smothering each other in passata once a year is probably the only thing that’s stopped the Spanish from completely losing it.

So it’s best to take the hubbub about Gibraltar with a pinch of sel for the time being – Spanish nerves are a little frayed right now. It’s the only polite explanation for the contents of a report leaked from the Spanish foreign ministry last week in which Madrid dug its heels in about the Rock. You might think, for example, that pressing a recidivist territorial claim first cooked up by fascist dictator General Franco was a little unhinged. You might also want to give Madrid a reassuring “you alright hun?” after they complained the British colony’s tax regime created “unfair competition with Spain.”

Urm…isn’t that the point of tax competition? After all, how would a tiny, impoverished entrepôt like Singapore ever have become the third richest country in the world were it not for “unfair competition” with Malaysia? The country is a tiny island of less than 300 square miles with no natural resources. In fact it was still reliant on Malaysia for its water supply when it was unceremoniously chucked out of the Malaysian federation with ‘no deal’ in 1965 for its stubbornly difficult nature and profound cultural differences with the mainland. Sound familiar?

Actually, when you think about it, Singapore’s relationship with Malaysia – of which it was a member state for all of two years – isn’t that bad a blueprint for Britain’s future relationship with the European Union. Cast out into the world, Singapore faced internal ethnic tensions, high unemployment (though significantly less than Spain’s today), little industry and a lack of trading partners, and the threat of either unfavourable reabsorption into Malaysia or being invaded by an expansionist Indonesia to the south.

The subsequent economic reforms of Lee Kwan Yew turned Singapore into what Jeremy Corbyn would call a “low wage tax haven”, while ministers toured the world promoting the country as a place to do business (sound familiar?) with tax holidays of up to a decade. The results were astounding. Singapore is now Malaysia’s single biggest customer, while Singapore’s are China and Hong Kong. Malaysia has been relegated to third place on the Straits shopping list. Clearly this rather levels the playing field between the Singaporean David and the Malaysian Goliath. “Unfair competition,” you might be tempted to say (if you were Spanish).

But Britain is already the EU27’s single biggest market – and the bloc sells some £60 billion more in goods and services to us than we do to them. No-one, not even Madrid in its current passata-starved delirium, is going to put that at risk by having Britain crash out of the EU, like Singapore, with no deal. Except maybe Jeremy Corbyn.

Paul is a Creative Editor for Conservatives for Liberty. Follow him on Twitter: @Whiggery

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The views expressed in this article are that of the author and do not necessarily reflect the views of Conservatives for Liberty