Phillip Dearden

Is that right? I am no economist but I think the theory is that even where the inflation is caused by exogenous factors, a rise in interest rates will dampen domestic demand for all goods and this will reduce prices across the board ie of many, but not all, of the components of the price index. It is a blunt weapon and it certainly has some negative consequences for the economy but evidence shows that it works. Look at UK and US inflation for the last two years. Inflation rose, followed by interest rates and inflation then fell. US rates rose earlier than ours and their inflation has fallen faster than ours. You might say this is a coincidence but it is a pattern repeated throughout history and has some theoretical support.

Pensions will be based on salaries (average, final etc...). Contributions would normally be based on expected pensions ie "what do we need to invest now in order to be able to pay this pension when the time comes". The difficulty with this scheme is that there are no contributions invested and future taxes will fund the pensions. In this context, I can't see that the phrase "Government contributions" means much. I suspect it might be used in internal budgeting but that does not assist with funding.

Do Government contributions mean anything in this context? The Government is the pension provider and the employer so these monies would be paid by IOM G to itself.

This is correct but isn't it also silly? You could divide the Earth's population up into 85k units and if each one concluded they were not big enough to matter and so continued to pollute and exploit then the planet becomes uninhabitable. On the other hand each 85k unit could decide to do its bit and there might be a chance of sustainability?

I thought Roxanne had been incredibly patient and tolerant.

That is actually a bit controversial. Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon..." . Some prices increases are exogenous (ie external) but in the conventional theory the extra money needed to pay for the increased costs (in this case fuel and some food) will result in a reduced demand for other goods so that other prices will fall. A general increase in prices can only happen if the Government increases the money supply (to fund expenditure) by more than economic growth. I am not able to say if Milton F was correct but his argument does mean that there is at least a defensible view that the current inflation is the result of government decisions. I did not say fault because they may have been doing the right thing and inflation may be the collateral damage. The real world is more complex than simple theories and the increased money supply may have originally pumped up asset prices and only latterly "leaked" into conventional RPI basket-of-goods prices.

I am sure there is no legal maximum time limit and I have seen liquidations go on for many years. However, unless there is money to be found, usually from the sale of assets or stock but possibly from a creditor, then the liquidator will want to finish it quickly. If the money runs out, he or she is not going to get paid. Usually, liquidation means there is not much money about.

No, its nothing to do with being shut down. It is the Actuarial estimate of our current value of the Govts. obligation to pay pensions. If the govt. were a company, this is the amount that would be required to be in a fund to cover the pensions. The Debit (cost) to the Revenue Account is the recognition of the obligation to pay deferred remuneration to employees, to omit this would be to ignore a substantial cost of Government operations. "lump sum"? Also not relevant.

The pension liability is a factor but that's because the pensions will have to be paid. "not payable in a lump sum", how is that relevant?

Is there much in it now? Whilst many reserves have positive balances the Net Total of all Reserves, Funds, Revenue Account etc (ie the bottom half of the Balance sheet) is minus £566m - see audited accounts 31/3/2021. This includes the NI fund.

It was either ridiculous or a very good demonstration of prejudice.

BUT does buying a car through a business save tax? If its a company, any private use will involve a Benefit in Kind charge. If its a person trading in his own name we are just talking about someone buying a car - they could only claim for the business element. Company Cars used to be seen as a low-tax perk but the BIK charges have been ramped up a lot since those days.

Per Wooley - I believe all income/trading profits are taxed on distribution, whether dividend, capital distribution or on liquidation.

I was not keen but I have moved on.

I think that you have spotted the problem but I suspect not easy to fix.

Are you sure?

John - enjoy your rest. Many thanks for keeping the forum on the straight and narrow over the years, I am sure it won't always have been fun but your efforts (and the other mods) are appreciated.

Are you sure?

Arnie Shimmin was my form tutor in the 3rd year at Ballakermeen.

There is no fund. The PS Pension Reserve is an allocation of the General Revenue Account and there is no separate pot of assets manged by a trustee to meet to the pension obligation. The General Revenue Account has been funded out of tax receipts and and any shortfall will also be funded out of tax receipts ie all pensions are to be met out of (past or future) tax receipts (plus investment returns). The Pension Reserve Fund was a sensible move in that when times were good, money was being put aside to meet the unfunded Pension Obligation but the fund never became big enough and from 2013 has been falling. The Reserve was never a fund in the normal sense of the word but was an "earmarking" of some government cash to meet Pension obligations. These monies are less protected than the NI fund.

Not quite. I have no evidence that anyone is currently softening us up for a raid/withdrawal. I was noting that it is possible and might happen in certain circumstances and some voters would even expect the fund to be drawn on in those circumstances, although others would not. There may be inter-generational disagreements.

Don't we all fool ourselves a bit re the NI scheme? We like to think the fund is sacred and sits there to protect the future payment of state pensions (not CS/PS) and MHKs like to reassure us that the law insists the fund is protected and we then feel happy. However, MHKs can change the law and they will if they feel it is necessary and there might be circumstances where the voters insist on change. Whilst the economy is doing OK, there should be no (immediate) pressure on the NI fund. At the moment NI contributions and Investment Income fill it up and State Pensions and Benefits are funded from it. The various reviews done a few years ago showed that as time went on, unless we had perpetual growth (impossible) then eventually payments would exceed receipts and the fund would diminish. Dates of 2055 and 2047 were mentioned as dates of disaster if no action was taken. I presume those dates are now invalid as both state pensions and NI contributions have changed and investment returns have been good - it would be good to see a more recent projection. The government Accounts show the fund at £983m at 31 03 2021. This is a chunky number. If the economy stalled in a way that health and education were significantly underfunded whilst the NI fund contained monies of this order, I expect (some?) voters would eventually move to requiring the MHKs to use the NI fund to ameliorate immediate problems (and long-term change would be required re state pensions and benefits). There would be differing views between different groups and much angst but I can't see Tynwald allowing children and sick people to suffer while almost a billion sits in a fund for the future. If you agree, and I know many won't, then the separation of the fund is not as absolute as we would like to think. In considering whether State Pensions, Government Services, CS/PS pensions, benefits etc can be afforded, it is future government cash flows in their entirety that matter and I can't see that partitioning these into "funds" really helps. Nevertheless, we do have a separate fund and in our minds we have chosen to believe its separation is important and now, any attempt to change that would be controversial. In these circumstances perhaps some MHKs might think it appropriate to break down the barrier gradually and perhaps that process has begun?

Josem I don't think I actually disagree but the position is not simple and there are a few points here I would like to expand on. 1. Re Reserves - these figures only make sense if you take all of the various Reserves, Funds and Revenue Accounts together. They currently stand at a negative figure. There are positive reserves but they are offset by a significantly negative Revenue Account (and associated Adjustments Account). The negativeness is much enhanced if you take out the NI fund, but I wouldn't. 2. Reserves are not cash. Much of the Governments assets are not convertible to cash. In order to assess ability fund expenditure and debt we would be better advised to look at cash flow, as opposed to reserves. 3. Whilst banks can expand the money supply by loan creation, they also require repayment which reduces the money supply. Most governments can expand the money supply to fund expenditure, whilst risking inflation/devaluation, but they rarely reduce their issued money so the increase in money supply caused by Governments is permanent. The IOM Government cannot do this and so it is in a different position from most governments. In fact it is in a tricky position as the UK Government might cause inflation whilst funding its own expenditure but the IOM Government receives no benefit but must suffer the higher costs. 4. It is not reserves which allows expenditure but cash flow. If you look at the Government accounts you will see that cash flow does vary from positive to negative over recent years and in 31/3/20 was negative ie there was a net cash outflow but very positive in the prior year. 5. The Government does have a significant asset which is not on its accounts and thus not reflected in reserves, which is the power to tax. If I were a credit rating agency I would be looking at projected cash flows - we don't see these but the ratings agencies might. 6. Whilst the IOM Government could expand its Balance Sheet and increase demand and so put upward pressure on prices I can't see that this effect could be significant. Most of the prices we face are determined elsewhere and the IOM Govt's effect must be small. I am using the audited accounts as these are presented in a conventional format and are audited.

I think the law works the other way round. Someone who sits in the house of Lords is regarded as UK resident and domiciled for UK tax purposes. I expect this is quite separate from the question as to whether they are IOM resident for IOM tax purposes. A person could be resident in both jurisdictions.

I knew him in a few roles, including AG. I always found him amenable, affable, sensible and good at his job - also pleasant to be around, a nice guy. A sad loss.