Fears Over Island's Vat Deal

[Evil Goblin]

If you look at the pattern of events which is developing there can be no doubt that the major jurisdictions are determined to rein in the offshore centres and the UK/EU in particular is targeting the Channel Islands, Caymans and the Isle of Man in particular. I suspect the BVI will also be getting the treatment. We are going to have to cope with some fundamental changes in the near future. Not only is there a threat to IoM Government finances from a revision of the Common Purse Agreement but they are also shaping up to attack the 0/10 Tax Regime. Add to that the revisions to the ESTD and Automatic Disclosure regime coming in a couple of years and it's going to be very tough. I am sorry to say there is likely to be a severe shrinkage in our Finance Sector, with all that such will involve. The White List, Grey List and what have you is only a small part of the overall story. We're all DOOMED, I tell you, DOOMED!

[Albert Tatlock]

I think that a lot of people have missed the point - especially Politician.

 

It doesn't matter how much tax you can squeeze out of Manx residents - it won't be enough - especially because the HNWI will just leave.

 

At the moment 90% of our income and 90% of our jobs come directly or indirectly from the international finance sector and its related industries (which includes most of the government jobs). Without this we will have no lawyrers, no banks, no accountants, no cafes, no retail, property prices drop, rental income drops, no entertainment (such as it is), no jobs, no need for all the substantial government departments etc.

 

The international finance sector is the only important sector to keep alive and anyone who says differently is living in a fantasy world. The IOM simply doesn't have the numbers to make it a viable contender in any other arena (especially not manufacturing given the cost of shipping to and from). Diversification is a good idea in the long term but is not going to help with this immediate issue - too little, too late.

I don't think many disagree that the emphasis should be on the finance sector, and especially government listening to those of us in it and creating the environment/laws/incentives for expanding into new markets.

 

But manufacturing does have a place too, especially hi-value stuff, we're not talking slippers and boxes of Persil here - I mean such as aerospace components, optical products, pharmaceuticals etc. Low volume, hi-cost - hi VAT take. Again government setting up the infrastructure and environment to aid this in parallel.

[Slim]

I'm sorry if you didn't understand my point, it wasn't aimed at you but what I was saying was counteracting comments that way forward was to abandon the IOMs role as a tax haven, raise taxes and try and join the EU which is daft.

 

International will has always 'threatened' what we are doing here, nothing new there - no different from many similar reports over the last 30 years. As always they will conclude we are better regulated than they are and go away.

 

I agree compliant planning is needed - but I don't think that means we need to increase tax as some people do.

 

Oh, I agree then, I'm just not sure why your points were in reply to mine

 

If there's a shortfall from the VAT, raising taxes a little might be the only option. Fortunately, it looks like our competitors are going to have to do the same. Provided we do it in line with other rises, it could be good.

[Tempus Fugit]

With the UK attacking us we should cease paying them for defence and review all the other payments we make to the UK.

 

With the VAT share being under attack we should all ( both companies and individually as Isle-of-Man PLC) collect every vat receipt from a UK company and send them to the local VAT office for them to reclaim each item of vat from the UK, it would be in our interest to do that and keep our local taxes down.

[Albert Tatlock]

If we are to be shafted again, is another bargaining chip we have with the UK, the estimated £25 billion that the island feeds into the City of London each year? I'm asking a question here - can't we use that fact somehow? - e.g. threaten to create incentives here for companies to divert those monies somehow e.g. say into Frankfurt and the German economy instead? In the big scheme of things, can our government somehow influence this cash flow?

[Mutley]

Why all the panic? All that has been announced is the renegotiation of the deal. Same thing that happened a few years ago. The process itself takes a while and in the meantime the times they are a changing (for the better) and nothing may change at all.

 

Also do we not currently collect the VAT here? The Customs and Excise infrastructure is already in place here and very little would need to change. We're pretty adept at signing Tax agreements with the EU and other countries - doing the same for VAT shouldn't be that difficult.

 

All this misreporting on losing £300m is a bit OTT.

[Politician]

I'm sorry if you didn't understand my point, it wasn't aimed at you but what I was saying was counteracting comments that way forward was to abandon the IOMs role as a tax haven, raise taxes and try and join the EU which is daft.

 

International will has always 'threatened' what we are doing here, nothing new there - no different from many similar reports over the last 30 years. As always they will conclude we are better regulated than they are and go away.

 

I agree compliant planning is needed - but I don't think that means we need to increase tax as some people do.

If you imagine for a moment that I was arguing that the Isle of Man should cease to be an international finance centre, then it's you who has misunderstood. Clearly we wish to maintain the viability of the financial sector, but it is perfectly possible to do that from within the EU — look at Gibraltar, which has a thriving economy.

 

My point is that the main aggressor to offshore finance is not the OECD or even the G20, but the UK government itself. By severing our constitutional links with them and entering the European Union as a microstate, we would be in a much stronger position — we could set our own indirect taxes, argue our case for business taxation directly with the decision-makers and have real redress if the UK attempted another sequestration of assets, as with KSF. But I certainly don't agree that that what is happening now is "no different from many similar reports over the last 30 years". The major economies are now unstable, and they are making offshore the scapegoat — we must be extremely careful.

 

Finally, I can't see an alternative to tax rises if we are truly facing a revenue black hole of £50 million to £100 million. Do you?

[Slim]

Why all the panic? All that has been announced is the renegotiation of the deal. Same thing that happened a few years ago. The process itself takes a while and in the meantime the times they are a changing (for the better) and nothing may change at all.

All this misreporting on losing £300m is a bit OTT.

 

It's estimated as a £50-£100m shortfall. Perhaps not time to panic, but certainly can't be ignored.

[The Old Git]

With the UK attacking us we should cease paying them for defence

 

Hear hear!

[The Old Git]

If we are to be shafted again, is another bargaining chip we have with the UK, the estimated £25 billion that the island feeds into the City of London each year? I'm asking a question here - can't we use that fact somehow? - e.g. threaten to create incentives here for companies to divert those monies somehow e.g. say into Frankfurt and the German economy instead?

 

I was wondering about that myself this morning

[manxman8180]

Finally, I can't see an alternative to tax rises if we are truly facing a revenue black hole of £50 million to £100 million. Do you?

Spend less?

 

 

A touch of a trivial answer maybe, but fuck have we pissed away some big bucks in the past decade. OK, we have some decent new infrastruture, but I've no doubt we could have been a bit wiser.

 

Reduce state benefits by 20% and half the capital programme plans. I reckon that's about £70 odd million.

 

Have a cap on recruiting into Govt posts (civil and public service) with an aim of an overall 10% reduction in 5 years. About £20 million.

 

 

Come on Treasury, this is dead easy!

[bluemonday]

I think we should muster all the Orc Battalions from Peel and invade them.

 

On a Saturday night when they're all watching X Factor and that Dancing thing.

 

Could march on London overnight, behead Broon, kill all their cattle and be back on Holy Ground by teatime Sunday.

 

Or we could always develop a Nuclear capability. That seems to be a popular choice these days.

 

or, a cheaper version.

 

Train some of the scallies at the Jurby Hilton as suicide frogmen and get them to wedge themselves in the water cooling pipes at windscale. As a bit of an incentive, they can be promised a Pardon and Manx Citizenship - if they survive.

[wazir]

If you imagine for a moment that I was arguing that the Isle of Man should cease to be an international finance centre, then it's you who has misunderstood. Clearly we wish to maintain the viability of the financial sector, but it is perfectly possible to do that from within the EU — look at Gibraltar, which has a thriving economy.

 

My point is that the main aggressor to offshore finance is not the OECD or even the G20, but the UK government itself. By severing our constitutional links with them and entering the European Union as a microstate, we would be in a much stronger position — we could set our own indirect taxes, argue our case for business taxation directly with the decision-makers and have real redress if the UK attempted another sequestration of assets, as with KSF. But I certainly don't agree that that what is happening now is "no different from many similar reports over the last 30 years". The major economies are now unstable, and they are making offshore the scapegoat — we must be extremely careful.

 

Finally, I can't see an alternative to tax rises if we are truly facing a revenue black hole of £50 million to £100 million. Do you?

 

The proposals you set out above would effect the end of the IOM as a tax haven. The HMWI would leave, the companies that are here for tax planning purposes (99%) would follow and with them would go the entire infrastructure leading to a huge loss of whatever revenue you think your proposed taxes will raise and massive unemployment.

 

The second paragraph we disagree on but that is a matter of opinion and only time will tell. I am old enough to have lived through several of these sorts of things and they usually go away much as they came, but as you say this remains to be seen. Each time anyone scapegoats 'offshore' they investigate and find we are compliant with all international standards and go away. Next time will be in 10 years with a Conservative government but we shall see.

 

Anyway ! The answer is not squeezing tax out of Manx people - it just isn't. Joining the EU, even if possible, will only ever increase expenses and taxation on the Manx for no good purposes.

 

The ONLY thing we can offer the world (with a tiny but highly skilled workforce) is financial services and we are in a MUCH stronger position to do this by not joining the EU which would insist on imposing EU compliant tax - much higher than you mention above.

 

The solution is to adapt our finance centre to provide more desirable solutions in light of the removal of VAT (if it happens) whilst at the same time gradually seeking to diversify the economy as Mr T says.

 

The answer is absolutely not to panic jump into bed with the EU ... IMO

[bluemonday]

It is at times like this that decisive, innovative, high quality leadership is required to produce efffective solutions in a rapidly changing and hostile environment.

 

Truly we are doomed.

[pongo]

If we are to be shafted again

 

How to know unless the actual numbers for the past few years are published and the working-out ?