New Manx Tax Strategy May Be In Place By 2003

Mandy Robinson, Tax-news.com, London

23 October 2000

A motion to introduce a new tax strategy was passed by the Isle of Man Legislative Council earlier this week. The deadline for the full implementation of the initiatives is 2005, but Treasury Minister Richard Corkhill is confident they will be in place by 2003.

The aim of the new strategy, explained Mr Corkhill, is to enable the island to become more economically competitive. Mr Corkhill said that corporation and personal tax in the higher rate category will be lowered to 10 per cent or 15 per cent for higher rates, and this would level out as more businesses would be attracted to the island and people would spend money on goods, thus raising indirect taxes for the Treasury. The Treasury Minister stated: 'We must give our businesses the confidence to plan their future. I believe this taxation strategy will take us a long way down that road.'

Although the response of the officials at the Tynwald meeting was generally positive, some concerns were raised by members relating to infrastructure, population increase, the threat to independence and unfair indirect taxes.

Dr Edgar Mann, a Member of the Legislative Council (MLC), said he considered the strategy to be of considerable concern because as the EU harmonised excise duty and VAT, the island would become uncomfortably reliant on them. He argued: 'The so-called dangers of falling tax revenue are quite small compared with the dangers facing us as a country ...we have to accept we are taking quite a large step away from independence in the political sense.'

Home Affairs Minister Allan Bell argued that potentially the strategy could establish a thriving environment for the Isle of Man but there are possible side effects in that it could also lead to a complete break with the traditional Manx life style. Health and Social Security Minister Clare Christian said a balance must be struck between enticing new business with lower taxes and minimalising the strain this could place on public services. She added: 'Many people would be willing to pay a little more personal tax if it improved services.'

Mr Corkill stated that he was adamant the public sector would not suffer and he would not condone lower taxes if it led to a decline in public services. Indeed, he argued, the strategy would benefit all businesses on the island regardless of whether or not they operated inside the finance industry.

Alex Downie (MLC) argued that the restructuring of local authorities would enable a fairer tax strategy: 'We need an effective system of local government ... which could then determine the best tax incentives to stimulate the regional economy.'

John Rimington (MLC) was the only outspoken opponent to the strategy at the meeting. Lambasting the new scheme, he said: 'We are charging forward with no consensus about what we are doing. We do not want a sustained economy but a sustainable one.'

The strategy has been on the cards for some time now. Mr Corkhill presented a draft for the initiative back in June this year when he said that it will 'help secure the economic future of the Isle of Man and the prosperity of its people. It will enhance future receipts from taxation; it will provide a firm and clear statement for investors and business; and it will reduce current uncertainties arising from international initiatives.'

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