When I first looked at the subsidy the UK gave to the Isle of Man through its VAT sharing agreement I came to the conclusion that the sum involved exceeded £200 million a year.
In 2009 the UK government removed £140 million of that subsidy a year.
Yesterday they announced intention to increase the withdrawal if subsidy to a total of £215 million a year — very close to the sum I first calculated.
Justice has been done, I am pleased to say. A subsidy to an island that did not need it so that it could undermine the effectiveness of the operation of the UK's tax system has been removed. This move does not in any way impact on the fiscal status of the Isle of Man but it does require that it raise its own revenue to pay for its own government in future if it insists on pursuing its wholly unacceptable taxation policies.
I am pleased.
I am also pleased to have been credited (by the Isle of Man government) with playing a part in this.
And I am pleased that, yet again, my estimates have been proven remarkably accurate.
On which basis I continue to forecast that the resulting economic crisis for the Isle of Man will force it, like Jersey and Guernsey to radically overhaul their economic policies and their tax haven status sooner rather than later.
And that's the best news of all for the UK, our economy and in due course for these islands and the people who really want to live in them rather than to abuse them.
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Who in government would be deciding this? Is this something we have to be thankful to Osborne for? One imagines not but if not, then whom?
BB
It follows a policy set in train by Stephen Timms for Labour
So are you saying it got through unnoticed by the Tory bigwigs? It seems contrary to general Condem policy (soak the poor) in general. I’m inclined to see it as evidence that there are splits coming in every major party plus the police and the army too, most walks of life in fact, as some agree with the trasference of wealth from the poor to the rich and wish to climb abroad the bandwagon while some are aware of such an outlook’s built-in obselescence and want to stop it for the sake of all.
BB
No I’m sure they know about it
I’m saying they didn’t start it and the momentum of Labour has followed through
Arise, Sir Richard (tbd).
Mr Murphy,
I live in the Isle of Man with my young family and I would consider myself to be pretty representative of the average person on the island, e.g. I earn below the average wage and have a small semi-detached house (with mortgage). I do not pretend to understand the detail of what was/is happening with regard to the VAT issue; however I do understand the following.
Already my family is suffering from the sudden cutbacks on the island, whether that be the day to day issue of being able to afford to feed my family, buy the children clothes or the issue of heating my house in winter. I have not had any form of pay rise for the last 3 or 4 years and I am now in very real danger of losing my job because people are stopping spending any money.
What you have done is probably quite commendable, however what it strikes me you have actually done is (very much) like encouraging a fight in a playground having some degree of understanding of what the consequence will be and then running and hiding in the crowd shouting “fight!”. From what you say some of the politicians and senior public servants on the island must be held to account – hopefully in the election in September, however I do not feel that you sitting there saying “I hope Mr Bell will apologise to me” is really nothing more than crowing and quite frankly it is not becoming of a man of your alleged stature.
I am very disappointed with you, particularly as someone who purports to be intelligent and a ‘moral crusader’. Perhaps you should have considered working with the government(s) in question to come up with a re-negotiation plan that didn’t nearly destroy the fabric of the island (for the average person) and have such a drastic effect on its residents, in particular e.g. children and the elderly.
Thank you for your contribution to the life of my family.
I hope you will excuse the fact that I have not put my given name to this comment; it is a small island.
I understand the crisis this will cause
But your criticism of me is not wholly fair – I have tried to write alternatives e.g. here http://www.taxresearch.org.uk/Blog/2010/07/04/plan-b-for-jersey/
I know an alternative economy is needed. That puts me way ahead in the responsibility stakes
It’s not my fault your politicians will not engage the issue – which they need to do – I would do so if only they asked
Voe them out of office, I suggest
We’re doomed!!
No, we’re not doomed – that’s just the FUD of the (hopefully) outgoing leadership of the Island and the (understandably) profit-focussed Chamber of Commerce.
No, the UK is not a bully – that again, is FUD.
Yes, there is an alternative, but it involves corporate tax which will upset the IOM’s rich.
The IOM currently does not know where and how to invest, as the leadership is weak and remains committed to the policies that caused this in the first place.
Although if it doesn’t change at Election time, it’s time to sell up and ship out.
Sounds about right
Mr Murphy, Living here in the Isle of Man I can relate with the words of exnavrig, but i would like to add a couple of things.
Firstly do not link us with the problems of the Channel Islands, we here have reserves, it is in fact against the law here for the Isle of Man government to go into debt. Jersey and Guernsey both have large debts running into hundreds of millions.
Secondly if you look at history the Isle of Man has been in far worse situation in the 70s and 80s and we came out and fought our way back to a triple a rating and on the oecd white list.
Yes things will have to be done differently here, government members will have to be more careful with spending, but also bear in mind the amount of money this Island , puts into the coffers of the City of London. Not to mention the hundreds of Tax advisors in the UK who advise people from the UK to put their money here.
As for us (IoM) joining the UK and or the EU don’t hold your breath they do very nicely out of us.
You will be aware that in October 2010 David Gauke UK Treasury answered a question about the renegotiation of the VAT agreement, to which he said ‘the Isle of Man will be entitled to keep the VAT it collects like any other tax’ after 10 months of negotiating by our Treasury team this was not the result, we kept a precentage of our, your word, ‘subsidy’.
We are nothing more than ‘collateral damage’ by a UK government who are bankrupt and desperate to gain money however small from anywhere. I don’t believe that your so called campaign would of managed anything if the previous and present UK government had not been in such a mess.
In conclusion if you feel you have seen the end of the Isle of Man in its present form, then you do not understand the 80,000 people of this Island. This is the place which took on Gordon Brown’s government’s plan to cancel the Reciprocal Health Agreement and won and got a u-turn. That was done by the people of the Island getting together and fighting.
So a word of warning to any government or parliament who pushes the people of this Island to the brink, be prepared we will fight, and we will win.
Your argument pretty much falls apart when you make claims about Jersey and Guernsey that are simply wrong.
From then on I read, with the very greatest of respect, a load of ego inflating tosh but nothing that changed the argument one iota
my apolgies you are correct on the Channel Islands like us they have large reserves, however unlike us they both had overspends during there last financial years.
You might call it ego inflating tosh , but for all the battering we have had, we are still here and will be for a long time.
For your reference on Steven Timms you might like to look back at history to when Gordon Brown as Chancellor he put forward a plan to get at the Isle of Man and was told by the then PM Tony Blar leave the Isle of Man alone, they put millions in to the City. I expect you to deny that as is your way, but I have it from 2 labour MPs that it occured, and when Brown came to power he did not reduce our VAT totally, and the only thing he could find to attack us with was cancellation of the afore mentioned Health Agreement. You might call it ego, We call it standing up for your community.
Nice words eddie power. I used to like the idea of the Manx coming together and taking on the world, certainly the UK. So I see where you are coming from. But over recent years the Manx establishment has kicked many of its very own people in the teeth. Just to cover up for big boys’ greed and inadequacies.
The greatest war for us is at home and it is against those big boys.
We will have our day.
Not until then will we worry about what the UK has to offer.
Exnavrig is VERY representative of this Island, i.e; ordinary working families struggling to make ends meet. I am convinced that you still harbour a misguided and bigoted view that we are all tax dodging millionaires, and are too intrenched to bother to see us for what we are. Furthermore, you cannot help relish in the perverse idea that we deserve a form of collective punishment for what started as a spat between Alistair Darling and our Government over a failed bank.
Your “Plan B” has much to commend it, but sadly it would not work. If this Island did not have a benign corporate tax regime, then there would be no jobs – it is as simple as that. We would end up depopulated and decimated, like the Scottish Islands. But just because we don’t accept your world view is no reason for you to celebrate the uncertain future our children face here.
Watch and see, we will get rid of our incumbent bozos, and tax will go up here, and the majority will be in favour when it does. So, with our so called VAT subsidy gone, and exchange of info under the EUSD (something you wrongly predicted would not happen), you’re fast running out of reasons to hate us for.
EP – arguing is futile. The UK is correct is cutting the subsidy (a fact that it was a subsidy).
The IOM is a tax haven, there’s no point in trying to disguise it, that fact is self evident in public statistics.
In fact, the economics will tell you that the Manx law mandating no Sovereign debt also identifies us as a tax haven.
The EU is a necessary piece of the future, although it’s hardly functional.
One thing we can say – We will face it, fix it & move on as a community.
I wonder if the Common Services Agreeement (Defence, Foreign policy, Inter Departmental Advice and any other services) and the Under Graduate Tuition fees will be the next the be examined closely by the UK?
I suggest that they should be
Totally agree.
[…] extensive coverage in the Isle of Man yesterday on my comments on the new VAT deal for the island, made here on Tuesday. Both Manx Radio and Isle of Man Today covered the story, reproducing much of my […]