IOMA Solutions director Craig Brown comments on yesterday's (Tuesday's) Budget:
"Towards the beginning of her budget speech Treasury Minister Anne Craine stated that the budget was 'not about grabbing headlines, but about doing what is right and not jeopardising the economic success the Isle of Man has enjoyed over the last twenty five years'.
"The budget was presented in a measured and low-key fashion, meaning that Mrs Craine has probably succeeded in her first aim of not grabbing headlines.
"Of more interest, however, is whether history shows that the subsequent aim was also met.
"With the benefit of hindsight, we may determine that there were, in fact, headline worthy statements contained within the speech, not least of which is the abolition of the Island's attribution regime after 5 April 2012.
"This move was announced by Mrs Craine as a means of 'achieving a time of calm co-existence with the European Union, and the wider world when we are not under constant attack because of our tax system'.
"According to the EU’s Code of Conduct Group, it is the Island’s attribution regime which they feel may lead to harmful tax practices, not the oft publicised zero-ten tax system itself.
"If the Code of Conduct Group’s comment can be taken at face value then Mrs Craine's announcement of the removal of this 'potentially harmful' regime is a very astute move and supports her view that 'there is no basis for changing the zero-ten system itself'.
"Whilst it would be overly dramatic to say that this move preserves the Isle of Man's competitiveness in the international financial community, it certainly removes a barrier to businesses thinking of relocating to the Island and should be a boost to the local financial industry.
"This new certainty, when combined with the stability of the Isle of Man tax system and the equity of treatment of taxpayers demonstrates that the Island is a serious player in the international financial sector; it must be hoped, therefore, that the Island will begin to see an influx of new business buoyed by the recent news.
"The remainder of the budget held few surprises, but contained a number of positive messages.
"Low unemployment, sustained economic growth averaging 6 per cent p.a. over the past 25 years and recognition as the best international financial sector in seven of the past eight years all paint a positive picture for the Island.
"Moreover, in spite of the expected hole in the budget as a result of the renegotiation of the common purse arrangement for VAT by the UK last year, Mrs Craine was able to report a small budget surplus in the current year; there was also further confirmation that the expected transfer from reserves of £114m over the next 5 years in order to balance the budget now appearing increasingly unlikely.
"The Isle of Man Government has clearly worked hard over the past year to maintain its well deserved reputation for fiscal prudence; at a time when the UK Government is under increasing pressure in connection with its own austerity measures, Mr Osborne could do much worse than looking to the UK's small neighbour in the Irish Sea for some inspiration."
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