Let’s give the Isle of Man’s VAT subsidy to charity instead

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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?