Gibraltar Labour Party Unveils Tax Plans

by Jason Gorringe, Tax-News.com, London

19 June 2003

The Gibraltar Labour Party has this week outlined its plans for the jurisdiction's taxation system, which it pledges to make fairer and more equitable by adjusting margins and generally reducing the overall tax burden.

In a recent statement, Labour Party leader Daniel Feetham said: "We have looked at the domestic tax legislation and issues of compliance and there are many areas where we think we should make changes. At the moment the brunt of taxation is raised from the ordinary man and woman on average salaries through PAYE. An average family with both spouses working faces a relatively high income tax bill and the highest level of tax applicable bites in at a relatively low level of income."

He continued: "Tax is deducted at source and there is no opportunity for any creative tax avoidance to minimise that tax liability. The tax rates in Gibraltar are also almost penal. The Labour Party is committed to reducing the general burden of taxation but will ensure that the tax system is fair to everyone."

Some of the policies Feetham intends to implement including the closing of certain tax loopholes and the amendment of a tax perk aimed at attracting top executives to Gibraltar.

"There is a well-known loophole in the tax laws under which income received by Gibraltar beneficiaries under a trust is not caught by the taxing provisions. Amendments to the Income Tax Ordinance were passed some time in 1994, but these have never been brought into effect. Labour will close this and other 'loopholes' immediately," pledged Feetham.

"Since around 1992 the Gibraltar Government has given special tax concessions to foreign executives 'possessing specialist skills' to attract them to Gibraltar and has fixed their tax at a level of £10,000 irrespective of income. The rate of tax has been fixed at the same level for over 10 years. Whilst we acknowledge the importance of such legislation as a means of attracting direct foreign investment, there must be a more structured and equitable means of taxing such individuals. Someone who earns say £70,000 should not pay the same amount of tax as someone who earns £300,000 under this scheme. Labour will review these special Rules immediately upon being elected into office."

The Labour leader also promised improvements in the areas of compliance which he considers particularly weak at present, and plans to give increased investigative powers to the Income Tax Office.

"Labour will review and amend the current “tax avoidance” provisions in the income tax legislation. These provisions would be strengthened so that artificial “tax avoidance” does not undermine the Gibraltar tax base. We will also review other aspects of the current law," said Feetham. "We will consider giving a 'tax amnesty' to those that do not comply with the law and would then expect everyone to fully meet their obligations," he added.

Recommended