BBC News - UK budget cuts 'hurting Isle of Man'.
The BBC reports:
The Isle of Man government feels bruised, as if it has been kicked around unthinkingly by Whitehall.
"The Isle of Man is part of the British economy," the Chief Minister Tony Brown tells me defiantly.
"We might not be part of the United Kingdom, but a considerable amount of the money we earn and spend is spent via the UK.
"We are a benefit to the UK, not a drain."
This is absoluttely absurd. Tax abuses sponsored by the Isle of Man were costing the UK at least £1.5 billion a year until the VAT subsidy was withdrawn. That means they are still having impact way beyond the total government income in the Isle of Man.
If the Isle of Man wants to stop hurting stop being a tax haven. The option is there's to take. But when you set out to undermine the government of another state - and that is what the Isle of Man conciously set out to do - don't expect any sympathy in return.
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“If the Isle of Man wants to stop hurting stop being a tax haven. The option is there’s to take.”
Obviously finding a viable comparative advantage is very difficult when you are a small island in the sea – all the basics of life are inevitably more expensive (food, energy etc), as is the transport cost of reaching markets with your own product.
In some ways becoming a tax haven suited Manx traditions (of smuggling etc) and was a logical and defensible step. But it always required being indulged by the UK.
If IoM offers to abandon tax haven status then I think it is entitled to negotiate some kind of recompense/structural adjustment support from the British govt, and possibly some kind of ongoing support through a Barnett-style formula that recognises its inherently a higher cost environment (potentially even recognising its inherent non-commercial viability in the same way eg as the Outer Hebrides – once also part of the Manx Kingdom).
But we’re a long way from anyone thinking about this kind of scenario, as far as I can tell. Understandably, the Manx immediate reaction is to think about full independence as the way forward rather than throwing in the towel on secrecy jurisdiction status. The Manx politicians have a big job on persuading their people that this would be a suicide mission.
It would be nice to start building up the understanding among people on the island that we aren’t being anti-Manx when we are anti-IoM as a secrecy jurisdiction.
(Richard, I know that you’re not, please don’t delete me!!)
You are exactly right: not anti-IoM, anti-IoM as a secrecy jurisdiction
But that will require integration into wider economic blocs, not independence
Richard,
I would like to thank you for bringing to the attention of the Manx public the truth behind the VAT sharing arrangement.
I can say for certain that clarity around this arrangement was never in the public domain here. Had it been so I believe Manx MHK’s would have found it contested by a multitude of its citizens who have a grasp of economic common sense.
MHK’s on the Isle of Man are not renowned for their political ability. The Chief Ministers comments to the BBC above reflect that.
The way forward for the Isle of Man is to become a UK region governed by Westminster. The sooner it does that, the sooner it can get on an equitable footing and work hard to enjoy the success it deserves.
Ibelin
I don’t believe Ibelin knows anything at all about the Manx if he/she believes they would be happy to become part of another country. The fact that the UK is in no financial position to take on further commitments would not seem to make this a runner anyhow.
Woolley
We can bail out failed banks at cost to us all
Bailing out failed island governments at net benefit to us is small beer in comparison
And it’s us or the EU in the end because the reality is, as I’ve shown time and again, the business model of the Crown Dependencies has failed
Richard