Customs deal still a secret - Isle of Man Today .
From Isle of Man Today:
DETAILS of the Island's revenue sharing arrangements within the Customs agreement with the UK have never been made public.It is perhaps the secret nature of the deal that has fuelled claims by the Island's most ardent critics, most notably Richard Murphy of the Tax Justice Network, that it effectively provides us with a £230 million subsidy from the UK.Mr Murphy, jubilant that we are to lose £140 million, nevertheless believes that a subsidy remains.
The Manx authorities vigorously deny that the revenue sharing arrangement ever constituted a subsidy.
Chief Minister Tony Brown said: 'It's never been a subsidy but it has been a very important agreement to the Isle of Man.'
'We've had no payments over and above what's agreed in the sharing mechanism,' Treasury Minister Allan Bell told a press conference 10 days ago.
Whether a subsidy or not, the sharing mechanism has proved a major revenue stream, contributing about £339 million each year — that's nearly 60 per cent of the government's annual income of £572 million.
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1) I’m reluctantly coming to the conclusion that you must have been right: there is no other obvious reason for our politicians’ ready acceptance of the reduced VAT share. Of course, in the absence of knowing the actual agreement, it’s impossible to certain, and I can conceive of political reasons why the Isle of Man might accept less from the arrangement than we paid in — but that certainly doesn’t seem likely.
2) If there really were a large subsidy, could they have admitted this publicly? Of course, not admitting it to themselves and making contingency plans is a different matter, and a very serious one.
3) This is not as easy as it sounds: with any economy built on low taxation, some version of the Laffer Curve will kick in viciously if rates rise above a certain level. My view is that we should be broadening the tax base considerably, raising rates cautiously and cutting the capital budget (which in recent years has given us a state-of-the-art new hospital, a quite luxurious prison, a vast power station, a futuristic waste disposal plant, a high-tech sewage treatment system that doesn’t work, an extended airport runway and new control tower, and several new schools) to the bone. Trimming our enormous civil service and ridiculous array of local authorities could also produce some immense savings.
“And the £140 million has a better use in the UK – by far.” I can’t believe I have just read that. And you seriously believe that McBroon and his cronies will use those funds wisely? You’re off your rocker. The reality is that it will go the same way as all other “taxed” monies, on providing public services that add little or no value to society except buying votes for the next ballot box.
Iliam
Re (3) – maybe. I was being illsutrative rather then prescriptive
I cannot be prescriptive anyway
But keeping things in proportion is important
Richard
Back to the subsidy line again, so I will ask one of my favourite questions again – why would the UK do that?
The Girrl
Girrl
As you well know (or maybe not – Jersey was oblivious to this deal for many years until I drew it to their attention) it was always intended to subsidise the IoM when it was desperately poor
Habits die hard
The 2007 revision was a cock up on the first occassion when it had higher GDP per head – but the wood was not seen for the trees
I opened the eyes of those who saw the wood
Now the subsidy has been removed
Try offering an alternative narrative
Nothing else fits
Richard