This article is more than 1 year old

This article is more than 1 year old

Belfast could be turned into a Singapore-style tax-free zone under proposals being considered by Boris Johnson, the frontrunner to become the new prime minister.

At a hustings in the Northern Ireland capital on Tuesday he expressed enthusiasm for the idea, when asked by a member of the audience.

“That’s the sort of thing we can do, we could do free ports, it would be a massive boost to the country but can only do when we can come out,” he said.

He confirmed that creating tax-free zones in ports was part of his vision for the country post-Brexit. “There will be about six of them, we will be doing free ports,” he said.

Locally, there have been calls to give the entire region of Northern Ireland “free port status” which would be mean imports would be processed in the region to avoid the imposition of customs duties.

Tina McKenzie, head of policy at the Federation of Small Businesses in the region, has said it “would be transformational for this society, whether you are a unionist, nationalist or neither”.

However, the idea, which has also been floated by Johnson’s rival, Jeremy Hunt, has been criticised as a sign of “desperation” to win the Tory party leadership and, ultimately, a backdoor route for tax evaders and money launderers.

Under proposals being considered by Johnson, ports on the UK’s east coast including Teesside, Aberdeen and Peterhead could become economic zones, considered independent for customs purposes, that charge no taxes or tariffs on imports.

Free ports are typically used to store high-value items such as valuable artworks, precious stones or antiques. They were heavily criticised by a European parliament report last year for facilitating “illegal activity” such as tax evasion and money laundering.

They are not necessarily on the coast, with Geneva Freeport, one of the world’s most valuable, consisting of seven warehouses.

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Free ports were also at the centre of the Bouvier affair, an art scandal, which involves allegations of fraud and money laundering linked to expensive paintings.

The Liberal Democrat MP and party leader hopeful Ed Davey said: “Looking to free ports for economic salvation once they’ve pushed us off the cliff shows the desperation of Boris Johnson, Jeremy Hunt and Tory Brexiteers.

“The British economy is fundamentally sound as part of the EU, but their vision means the UK would become one of the world’s most opaque, unregulated, and easily manipulated economies.

“We should be leading the world in business transparency, not promoting structures that have the potential to facilitate money laundering.”

Johnson was understood to be backing longstanding proposals for a free port on Teesside, while sources in his leadership team told Scotland’s Press & Journal newspaper that giving either Aberdeen or Peterhead the same status after Brexit could create 17,500 jobs and attract business investment.

Hunt, asked about the policy, had said he would be happy to consider Johnson’s proposals if he became prime minister.

MPs supporting the plans were understood to have held talks with the Treasury and Liam Fox, the minister for international trade.

Fox’s department has been considering its position on free ports but was understood to be insisting that any loss of tax to the exchequer must be counterbalanced by local economic growth.

The MP Martin Vickers, who chairs a cross-party group on free ports, said the group was “looking at the advantages to regional economies, particularly to northern, coastal communities, not the creation of tax havens”.

The former Treasury economist Chris Walker found that declaring seven northern ports (Grimsby & Immingham, Liverpool, Manchester Airport, Hull, Tees & Hartlepool, Rivers Hull & Humber, and Tyne) as free ports would boost trade by £12bn and create 150,000 jobs.

Alex Cobham, the chief executive of the Tax Justice Network, said there were wider implications than the impact on local economies. He said: “Free ports have repeatedly been shown to facilitate large-scale criminality, including tax abuse.

“The establishment of a free port should not be countenanced without, at a minimum, requiring far-reaching public registers of those using them and the assets involved.”

Free ports already exist in places including Geneva, Luxembourg, Singapore, Beijing, Monaco and Delaware, where they are often used to store valuable assets.

The European commission president, Jean-Claude Juncker, has been criticised by MEPs for dismissing their concerns about free ports, one of which was established in Luxembourg when he was its prime minister.

The European parliament’s report warned that they were “conducive to secrecy” and pointed to the role they played in revelations contained in the Panama Papers leaks.

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It also cited the Bouvier affair, which began in 2015 when the Swiss free port-owner, art shipper and dealer Yves Bouvier was accused of defrauding clients by misrepresenting the value of artworks that he sold.

The alleged victims are wealthy people in the UK, the US, Asia and Europe, most notably the Monaco-based Russian billionaire Dmitry Rybolovlev, who is suing both Bouvier and the auction house Sotheby’s for $380m.

As of early 2018, Bouvier was facing criminal charges in France, Monaco and also in Switzerland. He has denied any wrongdoing.

A spokesperson for Mr Bouvier said, “the European Parliament report is misleading: proceedings against Mr Bouvier have been instigated by only one individual, Mr Rybolovlev. His attacks on Mr Bouvier are without merit and we note that proceedings have not progressed in four years.”