THE change to the VAT revenue sharing agreement with the UK was raised in the House of Commons yesterday (Monday).
There was a written statement by the Exchequer Secretary to the UK Treasury David Gauke MP on the issue.
Just last week it was revealed the Island will lose £75 million of its income per year after the Isle of Man Government accepted the revised agreement.
Manx Treasury Minister Anne Craine MHK said the Isle of Man Government had to sign the new agreement in order to secure the Island's Customs Agreement but said it was a "significant and unwelcome reduction".
In the written statement in the Commons there was no mention of how much money the Island will lose.
This is Mr Gauke's statement in full: "The (UK) Treasury has agreed a revision to the formula governing the sharing of joint indirect tax revenues under the 1979 Customs and Excise agreement with the Isle of Man.
"The new formula is intended to give the Isle of Man the revenue that they would collect if they ran their own indirect tax system, while providing the Isle of Man with generous transitional payments.
"In 2010 the Isle of Man changed the way that it measured its national income to more closely follow international standards.
"Under the previous formula this would have implied a significant increase in the Isle of Man's share of joint revenues.
"The new formula provides the Isle of Man with a share of joint indirect tax revenues similar to that which the UK Treasury expected when the last formula was agreed in 2009.
"The Treasury welcomes the recognition by Isle of Man Government that the previous revenue sharing formula was not sustainable and we are pleased that a new formula has been agreed, following negotiations.
"The Treasury hopes that it provides a stable and secure basis for the long-term future of the Customs and Excise agreement between the United Kingdom and the Isle of Man."
Mrs Craine told Tynwald last week: "The new arrangement will result in a reduction in the Isle of Man share of VAT and shared duties of £75 million per year.
"The UK has agreed to make transitional payments to the Isle of Man in this and next year of £45 million and £25 million respectively.
"This means that in simple terms the new arrangement will reduce our shared revenue by £30 million this year, £50 million in 2012-13 and £75 million a year thereafter.
"This is a significant and most unwelcome reduction in our revenues particularly on top of the reductions resulting from the last revision to the Revenue Sharing Arrangement.
"In effect it is a further 14 per cent reduction in our annual income.
"Government's success in obtaining agreement for transitional payments of £45 million and £25 million in the current and following year will allow for a measured and managed change.
"However government has no intention of trying to mask the fact that this change will mean challenging times for the Island into the future and further it will require tough decisions to be made by the next Tynwald and government."
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