Gib Labour Party Calls For Tax Cuts For Individuals

by Jason Gorringe, Tax-News.com, London

26 August 2002

A spokesman for Gibraltar's Labour Party has suggested that the government needs to encourage economic diversification, reduce taxes on individuals, and increase the skills level of the local workforce in order to 'bring Gibraltar to the forefront of the international financial services community'.

Speaking last week, the spokesman explained that: 'The Labour Party believes that Gibraltar will face a number of challenges over the coming years (unrelated to the current sovereignty talks). To meet these challenges, first the government needs to introduce a higher level of budgetary discipline.'

He continued: 'Government also needs to embark on an economic diversification programme that is skill based, encourages enterprise and rewards success. Central to this philosophy is the notion that rates of taxation for individuals must be reduced substantially. At present, rates of taxation are at almost punitive levels whereas corporate tax will be abolished as from next year for the vast majority of business activities.'

He explained that throughout the jurisdiction's finance centre, but most particularly in the banking sector, the emphasis should be on training local workers in order to have available a highly skilled, specialist indigenous workforce rather than concentrating on attracting skills from abroad:

'The Government...has tried to encourage skillls to Gibraltar by providing tax incentives for highly paid relocated executives. However, tax incentives for expatriates on their own are not enough to create a local skill based environment because it does not always ensure that the skills are passed on to local people.'

The Labour Party spokesman went on to stress the need for Gibraltar to be among the 'centres of excellence' in terms of expertise and infrastructure, warning that offshore jurisdictions which do not provide a top quality service will eventually fade from view.

However, he warned that: 'Simply signing up to the various international initiatives (however significant these may be) will not guarantee our economic survival.'

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