The Guardian has another blog under the above title, addressing the issues of Jersey, Guernsey and the Isle of Man.
I have commented as follows:
It is worth noting that both Jersey and Guernsey face economic crisis at present.
I have shown why Jersey is at risk of going bust here.
The situation has got worse since the credit crisis has emerged.
Guernsey has to see massive economic growth to fill its budget gap as a result of introducing a 0% corporate tax rate. There is no chance at all it will happen.
The Isle of Man is different. The UK gives it a tax subsidy of more than £200 million a year to be a tax haven.
That is our money given to the Isle of Man to let them undermine our tax system.
The details are here.
We can stop the latter abuse. We'll pick up the tab when Jersey and Guernsey sink. Have no doubt at all: this is a UK domestic issue that our politicians have to tackle.
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If this is so then why is the IoM periodically inclined to abrogate the Common Purse Agreement and go our own way? Answer – although we wouldn’t be any worse off we can’t be bothered with all the hassle of having customs barriers. Carry on making “facts” up to suit yourself, Richard. They are a good source of wonder and amusement to those of us who know the way things are in the real world, as opposed to your La-La Land.
Clarke
Sorry – you’re in la la land
As I show, the IoM collects more than its GDP multiplied by the VAT rate of 17.5% when the rate was at that level as a contribution to its government income
In the UK with the same VAT system the rate is less than 7%
The fact is no one can collect more than their GDP multiplied by the VAT rate in VAT when there are exemptions, zero rates and exports and inputs. Its not possible.
So your argument is absurdly wrong. You are massively subsidised, as I say
Which is exactly why your ministers won’t talk about it
Why can’t you deal in facts rather than abuse in the Crown Dependencies?
And how about trying arguments?
Richard
“You are massively subsidised, as I say”\
Even if it is true, it is the same for Wales, Scotland in fact nearly everywhere outside the home counties. When goverment create Enterprise Zones and give tax relief for investing in these areas, or issuing tax credits (as in the US). Are these not all areas that a government uses taxes to assist a community to live? If the IOM was not using their own initiative, would the British Gov not have to subsidise them further?
OK. It sounds like it has been conceded that IoM is subsidised. there is a key difference between IoM and Scotland, Wales, Ulster, Cornwall and the North of England. Only one of these areas is “using its initiative 😆 ” to actively undermine the UK tax base. I don’t think that difference is trivial
Creg
I’ll take that as an admission that I’m right
But what you say does not follow from that. It’s true, we offer economic development to parts of the UK. It’s true, we offer it to developing countries. We should not do it to places that defraud us of tax revenue.
Yes, we’d have to bail out the IoM if its finance industry closed: I completely accept that. But we’d have stopped the fraud. That’s a price worth paying.
Paying you to do the fraud is not a price worth paying.
Richard
“Even if it is true”, I said, literacy standards must be slipping
As for your calculation Richard I will have to look at your assumptions, the GDP in 2005 of the IOM was $2.719 billion, as most of their product are VATable services, that’ll be US 475 million, so taking the US to GBP rate of 1.73 (dec 2005) is GBP275 million, so where is your 200 million subsidy?
Creg
So you suggested I was in la la land without even reading the paper? And you want to be taken seriously? And you can’t even use data all in sterling – the only currency of relevance here?
That really is 2/10 stuff.
Read it – then tell me what’s wrong.
Richard
The Isle of Man subsidy from the Common Purse is something that has always griped with the Channel Islands. It actually caused the Isle of Man to initiate the “race for the bottom” in dropping its rate of tax on regulated financial services businesses from 20% to 10%, which for competitive reasons Guernsey and Jersey felt obliged to follow. I understand that the Isle of Man rather regretted that move once the UK renegotiated a reduction of the Common Purse Agreement to a sum more equal to the amount generated from VAT within the Isle of Man.
Rupert
Again you should do your research
There is no evidence from the Isle of Man budgets that there has been any change in the level of subsidy after the renegotiation
Richard
Richard
The issue of renegotiation of the Common Purse Agreement was well-publicised in 2007.
The link below quotes Manx Treasurer Alan Bell:
http://www.iomtoday.co.im/isle-of-man-business/BELL-SIGNALS-CHANGE-OF-DIRECTION.2181123.jp
Perhaps again you should do your own research before accusing me of not doing mine. You are not always right, you know !
Rupert
But you said that the IoM got less as a result
I am saying that the evidence does not support that claim by you, or Alan Bell
Richard
Richard
I would be inclined to believe that Alan Bell would know whether he should be predicting a reduction or not. It seems clear that he was. I would be respectfully suggest that he seems better-placed than anybody to make that statement. Maybe the reduction didn;t take immediate effect ?
It seems at least as reliable as some of the “evidence” that you come up with to support your claims and allegations !
Richard
Looking at your calculations the figures you used are from 2005 and before, if there was a renegotiation in 2007 then it would not show up on your figures, do you have any other evidence to support your claim?
Rupert
I assure you – check the 2008/09 budget – the problem is still there
Richard
Richard
Can you not read ? See 12 above. I quote: ” Maybe the reduction didn’t take immediate effect ?”. If it wasn’t to take effect until (say) 2010, why on earth would it be in the 2008/9 budget ?
Rupert
I right up to 8000 words a day. I apologise if in this case I overlooked something you had written and misread it. Take it as evidence that I am human after all.
I also think that your point is entirely wrong: no one has implied that this is the case.
Richard
Richard you say that Jersey is having problems (just like every where else in this recession) but at least they are not in the position at the moment to go out and borrow money. If you want to see real problems perhaps take a close look around where you live.
This “I told you they would go bust’ nonsense is silly really.
The Channel Island do have their problems, I don’t deny that, but for heavens sake to go on the internet and say “this place will go bust” whilst their own country of original is borrowing billions is daft.
Jason
The UK has credit lines
You don’t
You have a rainy day fund that will expire
Very different indeed
Richard
Richard
I cannot see how you can say that “no one has implied that this is the case.” Well, actually the Manx Treasury Minister has, and its certainly not something he would be quoted on without some grounds for having said it. I believe on a separate thread he was quoted as projecting a reduction of around £38m.
Re. your response to Jason (18 above), the islands have no debt at all. Their official credit ratings are better than those of Italy and Belgium (and I suspect now the UK !). The reason that the islands don’t have credit lines is because they have never needed them and never asked for them. There is plenty of headroom for raising taxes if necessary to service government debt. A rainy day fund and no government debt is better than probably 95% of Western governments today. I don’t see the bailiffs (sic) being called in quite yet !
Rupet
The only reason you’ll need credit is because you’re going bust. which will be precisely why you won’t get it
You’re going to be losing £100 million a year
That’s 5 years until you’re out of cash
Richard
Richard
How on earth do you work that out ? I’ve already explained how £100m can very easily be recouped through GST if it became necessary. There are many different ways of raising tax revenues and you seem to be ruling them out when they have always been up the sleeve as back-up.
[…] have recently been challenged on this issue – some people saying that the subsidy has been eliminated as a result of the revision of this VAT sharing […]
[…] have recently been challenged on this issue – some people saying that the subsidy has been eliminated as a result of the revision of this VAT sharing […]
I would take any Guardian report on this with a pinch of salt. It is again factually inaccurate. The Channel Islands are not to blame for recession and thats a fact.
JTM
It is true: the Channel Islands did not cause the recession. But then, of course, nothing really happens in the Channel Islands at all.
However, the Channel Islands did facilitate the recession. Your lawyers did, for example, slice and dice an awful lot of debt and that has helped create the crisis through the opacity but they deliberately created
That is why banks no longer lend to each other, for example
You are not blameless, not by a long long way
Richard