I have been sent a Freedom of Information request made in the Isle of Man concerning the new VAT sharing agreement with the UK. I publish here what is, for my purpose, the most relevant page – the illustrative calculation. The rest of the document has been put on line. This calculation is new.
Let’s talk about what is known in this new document and what is speculation. The 2006/07 income is known. The subsequent uplifts and adjustments are not yet confirmed – and it’s very hard to believe that a) the IoM really did have 8% growth in 2007 and b) has continued to grow through the recession. That is certainly not true of the UK, almost any other economy I know of, and Jersey, so why of the IoM claims to have done so I do not know. I take the claim with a considerable pinch of salt as a result.
The data for expected VAT and duty is based on the UK budget for 2009/10. The figures are for adjustments to that data are, of course purely speculative. I have, therefore, ignored them.
Let’s be clear what this shows: it is that at most the Isle of Man might expect to enjoy VAT income under this agreement of £156 million this year.
Use the more reliable 2006 income data to apportion benefit and the income due to the Isle of Man would be £135 million.
The actual expected VAT income of the Isle of Man under this agreement this year, before revision, was £338 million.
That means, depending on the final proven level of national income in the Isle of Man, the level of subsidy was between £182 million and £203 million. I, of course, predicted a figure of £230 million: but I was using 2008/09 data and I used GDP not GNI for the UK in doing so.
But, the maximum sum that we learn is to be withdrawn from the Isle of Man is £140 million a year. Which means that, quite categorically, the subsidy remains. It has simply been reduced to a sum now running at between £40 million and £60 million a year.
That remains a scandalous use of UK taxpayer’s money. It also gives a complete lie to the claim that the Isle of Man neither was subsidised, and will not be in the future. It still is being subsidised.
But I should make clear: I can live with that. The Isle of Man may need to be subsidised, but I utterly reject the idea that a subsidy should be given without conditions being attached. My conditions would be simple. The Isle of Man should earn this subsidy by:
1. Definitely becoming a full information exchanging member of the European Union Savings Tax Directive as soon as possible;
2. Supporting current proposed extensions to that directive;
3. Requiring that details of the beneficial ownership, real management and full accounts of all IoM companies be put on public record;
4. Requiring that the Isle of Man match any developments in the UK requiring details of trusts to be put on public record;
5. That the Isle of Man proactively seek to sign Tax Information Exchange Agreements until it reaches a target of at least 60 – the average number for a G20 state;
6. the Isle of Man actively seeks to pioneer automatic information exchange agreements with other states.
That’s worth a subsidy. But the current arrangement is not worth a penny.
And as that for that statement that I made that I accepted that the Isle of Man was no longer subsidised – I withdraw it forthwith. It was wrong. The evidence, now available, simply does not support it.
So the debate goes on.