The Guardian has an article on the tax abuse shenanigans of Dixons (as most people still think of them) in today's paper as part of the Tax Gap series.
The abuse is simple shifting profit out of the UK. It's good to know it is being challenged.
But the Guardian also makes the point that:
The Isle of Man's haven status has long been controversial. Richard Murphy, the campaigning accountant who helps run the Tax Justice Network website, claimed in 2007 that the island was getting a sizeable subsidy from the mainland, of at least £300m a year. This was more than half the island's entire budget.
Most subsidy comes from a formula for pooling VAT receipts under the so-called "common purse" agreement with the UK, plus the fact that Manx islanders pay only a token contribution towards defence and foreign policy. Despite Britain's generosity, those who run the Isle of Man continue to market their island as a tax haven, with low income tax, company secrecy, and zero corporation tax.
The research is here.
It remains correct by the way: the massive subsidy for the Isle of Man is still being paid despite revisions to the Common Purse agreement in 2007. I expect to publish an update soon.
One simple question? Is this the best way to use tax payer money now?
I note charities are to get £40 million a year o help them cope with the recession. Why are we giving the Isle of man well over £200 million a year then to help them undermine our tax system?
I have a simple suggestion: all the tax subsidy to the Isle of Man should be cancelled and be given to UK charities instead. Any takers?
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Perhaps the IoM Government should use this £200 million to pay back the money to 10,000 innocent depositors in the failed bank Kaupthing, Singer & Friedlander (IoM).
Take a look at the above website and see the shenanigans going on with a wholly dishonourable Chief Minister and his cronies, a dubious FSC and its relationship with an equally dubious UK FSA. in fact if you dig deep enough you will probably find governments on both sides of the island in the middle of the “Iris Sea” are not blameless in this debacle.http://www.taxresearch.org.uk/Blog/wp-includes/images/smilies/icon_mrgreen.gif
Just a few thoughts on Mr Murphy’s ‘campaign’.
The Tax Justice Network (which Mr Murphy is a little connected to) has just published a list of the top 12 countries utilising financial secrecy.
The UK comes out 5th, a little behind a Delaware USA, Luxembourg and Switzerland.
The Isle of Man is not listed.
Good to see that got just as much publicity as the Foot Report, or the Edwards Review or the OFCD review – all of which gave glowing reports to the Island. Unlike Mr Darling’s throwaway comment which is obviously a better soundbite.
The IOM FSC’s failure to monitor Kaupthing IOM seems to have been on the basis that it was relying on the UK’s FSA to do its own job. When the FSA failed and the UK branch went under the IOM branch went with it.
The Common Purse is a historic AGREEMENT which was entered into for good reasons to the benefit of BOTH parties.
The UK has unilaterally imposed a change of terms without warning. It may not be a viable contract for the UK anymore given what Jersey is already doing and the budgetary constraints the UK faces, but an actual negotiation may have been seen as fair.
Did the Isle of Man provide nothing for the benefit of the UK’s defence? – how about land utilised by the MOD, or the personnel drafted who gave their lives for the defence of the British Isles.
If you increased corporation and income tax it is unlikely that the UK revenue would benefit – those using IOM structures to avoid UK tax, under measures lawful under English law, would move elsewhere. You would simply drive the IOM population into a situation where they have a reduced revenue, and an enforced recession (the financial sector – regulated more stringently than its UK counterpart accounts for 20% of private sector employment).
No doubt the IOM would see a return to the days when there were no local jobs and the population would decline, health and education suffer and the Manx folk would be left with only fishing and farming as industries (neither particularly appealing given the tidal flow from Sellafield).
Alternatively you might drive the IOM to consider the other option – independence, 0% tax across the board, an increased revenue stream, better class of living, less regulation (no-one seems to criticise the UK, USA or Switzerland), and maybe drive the benefit of the money coming through the Isle of Man to Dublin instead of London.
And how will London fare compared with New York once the British offshore centres are gone – the USA is not performing the same drive.
The Isle of Man remains a Crown Dependancy and ultimately its good governance – for the benefit of its people – remains the duty of the Crown to ensure.
It is difficult to see how forcing the Government to cut its spending by 20% without advance warning could possibly do this and it does little to enhance the relations between the two countries.