Isle of Man News - POSTED Thu 14-07-2011

Outspoken critic Murphy says he was "right all along" on Island's VAT loss

by Tessa Hawley

Outspoken critic Murphy says he was "right all along" on Island's VAT loss

AN outspoken critic of the Isle of Man’s taxation system has said he was "right all along" following the news that the Isle of Man will face a £75 million shortfall in income.

 

It follows 10 months of negotiations between the Isle of Man Government and the United Kingdom over the VAT Revenue Sharing Arrangement.

 

Economist Richard Murphy has said although he realises that this is a "massive problem" for the Island he believes it has been a long time coming.

 

Writing on his blog Mr Murphy said: "Why should the UK taxpayer subsidise the Isle of Man so that it can operate a tax haven and offer a standard rate of income tax of 10 per cent, a top rate of 18 per cent and a cap on total tax paid?

 

"It does not need a zero per cent corporation tax. It could charge capital gains tax. It could charge inheritance tax. All of these are choices - bad choices.

 

"Today's (Tuesday's) ruling means they will now have to collect tax, change their tax regime and attract real business and tourism.

 

"It also raises another question – how long can these crown dependencies last? Jersey, Guernsey and the Isle of Man all have holes in their budgets, their tax regimes aren't viable and very soon they will have to apply to the UK or EU for inclusion.

 

"Justice has been done, I am pleased to say. A subsidy to an Island that did not need it so that it could undermine the effectiveness of the operation of the UK’s tax system has been removed.

 

"This move does not in any way impact on the fiscal status of the Isle of Man but it does require that it raise its own revenue to pay for its own government in future if it insists on pursuing its wholly unacceptable taxation policies.

 

"I am pleased. Now accept that I've been right all along and begin to adopt a post-tax haven plan for the Isle of Man."

 

Mr Murphy added that his campaign on this issue was now over.

 

Also see: "Challenging times" ahead as Isle of Man loses 14 per cent of annual income

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