There are elections in the Isle of Man this autumn so whilst there is no effective party political system as such in the island (a fact that seriously undermines the effectiveness of its democracy) there is plenty of manoeuvring going on - not least because it looks highly likely that current Chief Minister Tony Brown is looking to move on the Presidency (which is a less political role).
Allan Bell is the current Isle of Man Economic Development minister who has long been involved in the politics of finance in the island and it seems clear he's now looking for higher office and has been out on the stump, as Isle of Man Today has reported.
He knows how to win support. It's reported that:
He said the island needed ‘national and international politicians' and suggested some current MHKs were ‘really extensions of local authority members'.
That should win him lots of backing amongst his colleagues.
More worryingly though he says:
THE next five years will be the most challenging the island has faced in a generation.
His stark warnings, made against the backdrop of a likely further revision of the VAT deal, were outlined to a breakfast briefing .
Mr Bell told the Examiner afterwards: ‘The next five years will be the most challenging for a generation, on a whole range of fronts.
‘We need the Isle of Man to recognise just how serious it will be economically and to rebalance the budget.'
I have to agree: I've said the Isle of Man is at real risk of going bankrupt, even if not as soon as Jersey and Guernsey might.
But what's really worrying is his solution:
But he said one issue would dwarf all others in the years to come — the affordability of the state pension.
He said: ‘The debate so far has taken place on the affordability of public sector pensions and the need to get them back on a firmer footing.
‘But the bigger challenge is the sustainability of the state pension in a smaller community like the Isle of Man with an ageing population.
So the Isle of Man is facing bankruptcy because of its tax haven activities - which the UK is now refusing to subsidise and which their own tax structure cannot fund, and yet who do they choose to pick on to make the sacrifice that they think is required to allow the abuse they permit to continue? Why, the old in the island!
This is economic madness where the ordinary people are made to pay for the tax abuse of the rich laid bare.
And Allan Bell is seeking office on the basis of delivering it.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
IoM has reserves and, unlike the UK, is required to operate a balanced budget – we cannot fund ourselves by placing a debt burden on future taxpayers as is done in the UK. That’s why it is an issue. IoM, unlike the UK, is required by statute to perform good fiscal management, our politicians cannot cop out through the unfair and immoral policy in the UK of taxing future generations.
It would be good to see the UK taking its future burdens and responsibilities more seriously, instead of the half-hearted “cuts” being executed by the current regime. The UK would have been bankrupt years ago if anyone had dared call in the £900,000,000,000 debt. But like the banks, it is “too big to fail”. (Like Ireland, Greece, Portugal ? ….. the gravy train will run out sooner or later!)
Mr. Bell’s view on needing national politicians are well known. Whilst they might irritate some of his more parochial colleagues, reality is that local people in small constituencies will do the voting for MHKs. At least Mr Bell is honest enough to tell his local constituents that they shouldn’t be voting on local issues – he keeps telling them, they keep electing him!
I’m glad to see you raising the issue though Richard, I just wish you’d look a bit closer to home. Your healthcare, your defence, and yes your state pension, will all be paid for by your grandchildren. Is that a responsible way to live?
Your argument makes no sense at all
Almost all private sector pensions are based on ownership of UK gilts to pay their annuities
No debt = no pensions
Think about it
Think too that the only way to clear debt is to grow income – and only government spending could do that right now
Not mine! And there are other investment mechanisms. But you were talking about public sector pensions – why switch?
“The UK would have been bankrupt years ago if anyone had dared call in the £900,000,000,000 debt.”
To whom do you think this “debt” is owed. Basically it’s just the negative counterpart to the Nations “wealth”.
Sigh.
Then I assume the UK is the wealthiest it has ever been? By a long way? Your logic is a bit busted. If I have one mill free and clear I may be “wealthy”, if I have one mill and owe one mill I am not wealthy, I’m broke but for the grace of my creditors. Ask the Greeks.
You are right
The simple fact is that UK government debt is a great asset in people’s portfolios
It’s why they buy it
This really won’t do. In our monetary system the State is a currency issuer, whereas other parties such as firms, households, and foreign entities are currency users. This means that the State does not need or value money, as it can create as much as it chooses at will. As Warren Mosler puts it: the state has and doesn’t have any dollars. When the State taxes it destroys money. (It doesn’t need to tax in order to spend). And when the State spends money into the economy, it is creating money. If the State runs a deficit then it is sending a net injection of newly created money into the private sector. Similarly, if it runs a surplus it is draining money out of the private sector. The net quantity of money thus injected is leveraged by the private sector into net financial assets. This is the only mechanism through which the private sector can hold positive financial assets, as the liability exists as a negative counterpart in the government sector. The State’s “Debt” is not debt. All these facts, which can be quite startling to ignorant politicians and an innocent public, can be found in such elementary texts such as Wray’s “Understanding Modern Money” or Chapter Two of Godley’s “Monetary Economics”. You should have noted my scare quotes with respect to the word “wealth”. As Ruskin says: “No Wealth but Life”. But as things stand, the Government’s “Debt” is the private sector’s “Net Financial Assets”. Your whole thesis with respect to the State’s position and supposed dependence on the “markets” doesn’t make sense.
And Ian Gorst is doing much the same in Jersey
Iomtoday site is carrying another item on a similar subject reminding readers of next week’s VAT sharing meeting.. http://www.iomtoday.co.im/news/isle-of-man-news/crunch_time_on_vat_deal_looms_1_3545909 The comment by reader collins14 is one of the most frank, stark and honest things I think I have read. If only rubbing our temples hard enough would allow the people of the Isle of Man to travel back in time to stop themselves from allowing their politicians from leading them down the path where the State became over reliant on the VAT subsidy. The problem I think was as long as they seemed to get fantastic benefits of a high spending government with low direct taxation most voters were complacent about where the money was really coming from or going to.
Richard please be careful of your use of the word “they”. Not everyone agrees with Allan Bell! I think most western democracies, including the United Kingdom, have ignored the issue of baby boomers, pensions and aged-care for so long that they all have major problems (Australia and Chile may be exceptions on the pension front). What is worrying about Mr Bell is that he is steering well clear of any talk about income tax – and the infamous tax cap. It is election time of course. He has also steered well clear of any mention of politicians, like himself, having to contribute toward their own pensions at a real commercial rate (estimated by an FIA to be 12-15%).
It is also a reflection on his vision and abilities that in his time as Treasurer he failed to deal with the impending problems – definitely ruling himself out as an ‘international politician’.
The Isle of Man can do things to live within its means – indeed it may well be a real opportunity to creat a more equitable and just society.
But before ‘we’ can do anything about this we do need to know how much revenue we are going to lose through changes to the VAT Agreement and how much we can generate ourselves and/or by how much government expenditure can be reduced. You seem to have a somewhat more negative view of our future than I have. I still think that there are opportunities but we need to know the size and shape of the playing field.
P.S. If you check further on the IOMToday (Examiner) website you will see that in an opinion poll about the Prsidency of Tynwald Tony Brown, the Chief Minister, had less than 5% popular support for his election to that ‘figurehead’ role. Of course in our democracy the actual election is open to politicians only – not the people. A bit like the election of people to the House of Lords in your democracy!
The Isle of Man (Jersey and Guernsey) is about unacceptable PRIVELIGE.
In nineteenth century privilege could be freely bought — a commission in the army, a seat in parliament and a stipend in the church.
These unacceptable privileges have long since been prohibited in the UK — yet the abuse of power continues on the Isle of Man where wealthy individuals/companies can violet decency and morality by accessing a raft of elaborate tax evasion/avoidance schemes designed by smart/expensive lawyers and accountants.
This abuse of privilege is only available on the Isle of Man (and other secrecy jurisdictions) and the island’s politicians who control every facet of life on the island are complicit in this archaic and nauseating exploitation of power.
The Isle of Man is not a democracy and “elections” on the island are a travesty controlled by a few fat-cats (in league with the finance industry) who prosper by depriving the rest of a fair and just society.
This island is still in the dark ages. Don’t go there.
Whatever your views on privacy, the elections on the Isle of Man are free and fair, most candidates are independents, the system is not dominated by corrupt and undemocratic political parties, turnout is typically around 2/3rds of voters, and as one who is neither a fat cat nor a politician I am very grateful to be part of a system where privilege and patronage does not buy parliamentary candidacy or representation as it so often does in the UK.
Obviously the IoM system doesn’t work well for bullies and special interest groups – and it’s all the better for that.
Respectfully that’s utter rubbish
the entire system has been captured by finance and your whole structure is designed to meet its needs
Your democracy is all about one special intrest group that has bullied your whole system into submission
The Isle of Man’s “balancing of the books” by Statute is by way of arrangement with the UK as sovereign power. There are no Westminster politicians in Tynwald and thus no influence over the Supply Vote…so by way of constitutional arrangements the IOM has no obvious national deficit…The IOM Government also has no independent legal existence as its own High Court long ago declared. The IOM is really British Government with a different and rather convenient hat on…
Agreed
It’s basically the UK saying ‘don’t borrow as we don’t want to bail you out’
Which they’d have to do
In addition to the Common Purse Policy (VAT IOM/UK) that the UK is now reviewing there is the small matter of the Commons Services Agreement covering Defence, Foreign Policy, Inter Departmental Advice and any other services where the IOM is greatly benefitting. Also the IOM again benefits from the middle rate for Under Graduate Tuition Fees.
Paul
To be honest Paul, I and many others are of the opinion that the sooner we’re out of such agreements with the UK the better. The biggest defence threat to the IoM is the UK, Foreign representation of the IoM by the UK is so poor that IoM is making its own arrangements, advice from a UK Civil Service that has helped to bankrupt the nation is pretty worthless….
As for the VAT, again in my personal opinion it would be simpler to be outside it than suffer the financial instability of the UK’s inability to make an agreement and stick to it. Hasn’t done the Channel Islands any harm.