Gibraltar Labour Party Releases Shadow Budget

by Jason Gorringe, Tax-News.com, London

20 June 2003

The Labour Party of Gibraltar has announced further details of its shadow budget this week, which it says aims to make the tax system more equitable by shifting the burden away from low and middle income earners and closing loopholes for foreign executives and HNWI.

In a recent statement of intent, party leader Daniel Feetham declared:

"Next week the Government will once again bring its Budget before the House of Assembly - with that in mind we have decided to publish the measures we would have introduced had we been in Government and the measures we are committed to should we be elected into Government."

Some of the measures the Labour opposition has in mind include:

"An increase of tax contribution in a more structured manner from foreign 'Relocated Executives' who under the current the Government tax scheme come to Gibraltar and only pay a fixed amount of £10,000 tax irrespective of income earned in Gibraltar. This could easily increase tax revenues in this area and it is obviously not targeted at local taxpayers."

"Abolition of stamp duty for 'first time home buyers'. We believe our young people in particular should be given this assistance in the purchase of their first home. Such relief would not be available to individuals who come to Gibraltar under any Government sponsored tax scheme (ie High Net Worth Individuals or Relocated Executives). Correspondingly, the Labour Party would like to see an increase in stamp duty for those that can afford to buy luxury homes. If someone can afford to buy a flat sold at say £500,000 they can afford to pay the Government a greater revenue contribution by way of stamp duty."

The statement went on to add that: "Taxpayers should not subsidise tax cuts for those that are not resident of Gibraltar. Labour would like to see a reduction in taxes and tax relief directed at Gibraltar residents. We believe that the Government should consider reducing rates and granting tax relief (capped at a certain level) in respect of the payment of household expenses."

It continued: "Labour has long advocated increases in indirect taxation which would allow for a decrease in the burden of personal taxation. The Labour Party believes that there is room for marginal increases in the duty payable on petrol, alcohol and tobacco. This would naturally increase Government revenues and allow us to pass that increase on to the taxpayer through our planned reduction of income tax."

"Labour does not see any merit in the grant of Development Aid ("DA") for any further luxury developments. DA is granted to the Developer and allows the developer to distribute profits to its shareholders with a reduced tax of rate. Developers that continue to construct luxury housing not directed at locals should be fully taxed on the "windfall profits" they make."

The Labour Party shadow budget concluded with the observation that: "In view of the Government’s decision not to implement its EU driven Tax Reform legislation in July 2003 but delay implementation until 2004, there is no reason why the Government cannot levy some kind of a licensing/registration fee (as opposed to profits tax) on financial services providers to raise some revenue from a sector which will largely continue to enjoy Tax Exemption for another full year."

"These measures are all in addition to our longstanding commitment to reduce income tax payable by retired pensioners to 10%."

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