Isle of Man Examiner letters, February 18, 2014

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People will throw rocks at MHKs

Politicians have been very prominent in the news lately. The ‘Dynamic Duo’ of Quayle and Houghton were taken to task on Sunday Opinion (February 2) and explained to an angry public the reasons for the sewerage tax and higher electricity charges – evidently not successfully as calls to the ensuing Mannin Line showed.

Mrs Beecroft has also been in the news for her ‘spat’ with Eddie Teare over the Pinewood Studios investment – worries over her blood pressure being expressed as she got worked up during Keys Questions.

Mr Phil Gawne also raised his head above the parapet to declare his intention to bring in a motion to have ‘Leg Co’ abolished – a move which will make him popular with voters – but will have a struggle to get all the turkeys in there to vote for Christmas.

Mr Rodan interviewed in a small snippet of news broadcast between Sunday Opinion and Mannin Line revealed the live televising of Tynwald Court was still being actively pursued even though the cost of such a project would be enormous.

This from a government that says it has no money and is actively picking the pockets of everyone by means of the grossly unfair ‘sewerage tax’ – imagine all our MHKs taking to the small screen starring in their own soap opera – ‘Tynwald Street’ where people watching could actually see our money being poured down the drain.

The public has made its feelings plain, the ‘sewerage tax’ is unfair – ill thought-out and despite soothing noises by the government the public just won’t buy it.

The MHKs emerging from their TV studios onto Prospect Hill might need a couple of ‘Grant Mitchell’ style bodyguards outside – not to ward off adoring fans but in all probability to stop people throwing rocks at them – all of them furious at a pernicious tax being pushed down their throats by our politicians who after all in just a couple of years could be history along with Leg Co the learned David of ‘Waldorf and Statlers’ looking down on us and costing a fortune.

DG Dobson, Port Erin

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Tax e-gaming firms instead

I wish to address the issue of the sewerage charge being imposed on all ratepayers, whether their residence is private or rented.

There is an understandable outrage that this will affect rich and poor alike, no matter what size of property and without any reference to a person’s ability to pay.

This may well pan out differently once the government has set about a full review of rateable values.

However, it is not so much the amount, serious enough as this will be to the vulnerable in our community, it is the way in which the concept of ‘user pays all’ has been announced.

In the opinion of the Municipal Association, the government has made a serious error of judgment in firstly not explaining to the people what ‘user pays all’ will mean for them, and by failing to talk to the people who are responsible for collecting the rates and delivering local services i.e. councillors and commissioners around the island.

At the Municipal Association we have not seen a single politician or civil servant at our monthly meetings since March 2012, in spite of previously having regular meetings set up with the local government section of the Department of Infrastructure.

I am sure they will want to say that this was because we had invited the Chief Minister to discuss with us his ideas about local authority reform. Because the Chief Minister has been too busy over the last 18 months, we have abandoned all hope of meeting with him and now have to resort to public statements, press releases and invitations to speak on Manx Radio.

None of these fall naturally to us.

We get on with our work quietly, many performing professional services free of charge and without claiming their attendance allowance. However, statements in Tynwald by the Chief Minister that, in summary, we are basically an incompetent bunch of amateurs, have incensed many, which, when added to the so-called toilet tax, has brought us out of our corner.

What we need to grasp is that, if this mantra of ‘user pays all’ is carried to its logical conclusion, you could be paying for your next hospital treatment, a toll on taking your car onto the public highway, or any other government service to the public you care to mention.

This is clearly a nonsense and is merely a convenient way of passing on central government costs without any noticeable pain being suffered by our politicians, or a significant reduction in the biggest cost, that of the civil service.

Taxation on the island comes from three principal sources – income tax, VAT and rates, whether administered by central or local government. The present move indicates that government is going for the soft underbelly of taxation, that of the rates.

Now, accepted that the rates on the island are considerably lower, for both private and business property, than in the UK, the call will come as to how we are going to raise the money to satisfy the deficit in the nation’s finances, if we are to avoid the toilet tax and not damage our ability to compete internationally for business.

Before a tax on the rich and vulnerable alike is imposed, here are a few personal suggestions for Treasury to mull over.

Rather than rant on about politicians taking the lead with regard to their sundry benefits, which have been aired in previous letters to the editor, I would like to see a fresh look at business tax if we are truly ‘in this together’.

The 0/10 policy was introduced in days of apparent plenty, as an answer to outside pressure from the OECD that ‘offshore’ companies should pay the same corporate tax as resident companies.

In what was seen as an inspired answer to the problem, it was decided that equalisation should occur by reducing local company tax to the same level as ‘offshore’ companies.

A pleasing result to those of us in business locally, which, it was reported at the time, would cost the Manx exchequer annually around £18m to preserve the ‘golden goose’ we know as the finance sector.

As we keep being reminded by our politicians, things have to change or we will have to countenance a reduction in front-line services.

If things are as bad as we are being told, we have now reached the stage where we have to take a less precious attitude towards business and find a way of reintroducing corporate taxation.

I would firstly extend the 10 per cent charge to the e-gaming sector, which on a worldwide basis has millions of pounds’ worth of turnover.

If we saw only a small fraction of that in taxation from our resident e-gaming companies, it would make a considerable difference to our fortunes. However, I would not introduce this in the way the ‘toilet’ tax has been sprung upon the ratepayers.

Discussion is essential and the e-gaming companies should be presented with the same mantra that ‘we are in this together’.

In negotiation we could well agree to phase this in, say, over a five-year period. Before anyone jumps to their feet saying this will result in an overnight exodus of the e-gaming businesses, I would remind you that one of the MDs of a local e-gaming company said, on camera, that he wouldn’t object to his business playing its part in re-balancing the nation’s finances.

Why is our government apparently so scared of opening up discussion in this sector?

Secondly, if this was not enough to fill the gap in our finances, I would look at reintroducing a corporate tax of 10 per cent on all companies.

Going back to the days when 0/10 started, a corporate tax of £250 per company was introduced, which was then added to the annual return charge to save the administration costs of collecting two separate fees.

Having established this principle of a corporate tax, there is opportunity to increase the annual charge substantially in the mix of collecting an appropriate rate of corporate taxation. Government should sit down with an organisation such as the Chamber of Commerce and have the ‘we are all in this together’ conversation.

Thirdly, if we are still not hitting the mark – and some say this should be the first move – government should look at the serious under-contribution to the nation’s finances from the large UK retailers who have taken up island residency. It is an acknowledged fact that rates payable here fall considerably short of those paid in the UK.

I would suggest a government levy on all retailers trading out of so called industrial estates – which are rapidly turning into retail parks.

If the economy does pick up you can be sure that there will be a lot more of them landing on our shores, threatening our High Street businesses. A levy based on 50 per cent of their lease payments would, in the case of PC World/Curry’s, for example, result in an annual charge of £90,000.

This 50 per cent levy, when added to the local authority charge, would still be less than UK stores pay per square foot in rates. If we are serious about preserving our High Streets, some of this levy could be used to encourage more footfall in our town centres.

In summary, can our government deny that the proposed sewerage tax is merely the tip of the iceberg in what is to come?

Unless we raise our voices now, the debt of the utility conglomerate envisaged, which will pull together water, sewerage and electricity, will land at the feet of the ratepayer.

The total indebtedness of this conglomerate is around the same as the island’s total net annual budget. It was advocated by an attendee at the public requisition meeting in Peel last week that ratepayers should deduct the £50 ‘toilet’ tax when their rate bills arrive shortly, as an act of public protest.

I trust it will not come to this and that a shift in government thinking will take place, starting with a serious dialogue with businesses. Without this rethink I am afraid that the government has awoken a sleeping giant.

David Talbot, Chairman, Isle of Man Municipal Association

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No sign of the island at show

I write regarding the Travel Show featured at Earl’s Court, London on Saturday, February 8.

My son attended this event and was surprised, indeed, very disappointed that there being nothing at all on the Isle of Man stand regarding air travel facilities to the island.

As we all know travel to London has been the subject recently of great debate. We would have thought that flights to London City in particular and also Gatwick would have been well highlighted.

In my capacity of tour guide on the island for several years mainly with coach holiday makers visiting us I make it my personal crusade to bring to their attention the benefits of air travel, particularly London City, not having the difficulties encountered with miles of corridors and stairwells of other airports, the short booking in times and of course a flight time of 1 hour.

I hope that this will be noted in future exhibitions.

John Hodgson, Port Erin

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Disparity in pay at authorities

The imminent merger of the Manx Electricity Authority (MEA) and Isle of Man Water and Sewerage Authority (WSA) raises this concern.

According to the latest report and accounts of each organisation, 49 MEA staff members earned £50,000 or above, with six of these earning £75,000-£100,000, one £100,000-£125,000 and one £125,000-£150,000.

At the poor WSA, only seven staff earned £50,000 or above: five £50,000-£62,000, one £70,770 and one £88,223. In percentage terms it appears that these figures represent about 23 per cent of MEA staff but only 4 per cent of WSA staff.

In addition, the MEA and WSA contribute 17 to 22 per cent of salary in pension funding so, at the lower rate, anyone on £50,000 effectively receives a further £8,500 in salary after tax.

Taxpayers should question, therefore, what will happen when the politicians, management and unions get together to ‘harmonise’ terms and conditions in the new authority.

My experience in the private sector shows that this process always tends towards the worse of the two packages but I fully expect that in the public sector the reverse will apply. I hope that Mr Houghton and his cronies can resist the temptation to upgrade salaries so that 23 per cent of total staff in the new authority make £50,000 or more, and make other adjustments, just to make pay ‘fair’.

The handling by the government of the implementation of the toilet tax and the merger has so far been a huge public relations disaster and this situation will only get worse if the public are not kept up to date with details of what happens in respect of staffing, salaries and other merger issues. The first report and accounts of the amalgamated authority should be required reading for everyone!

Name and address supplied

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A question for the Gazetteer

I was interested to read John McLean’s story of Thomas Glover bringing the name Axnfell to the Isle of Man as recently as the 1890s (Examiner letters last week). He states that ‘the name has nothing to do with English fell’.

However, would he agree that the derivation of the name is ‘ox mountain’ as given in Leslie Quilliam’s excellent and useful Manx Gazetteer?

Clive Alford, Stanley Road, Peel

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Boarding threat will not work

Further to my earlier letter (Examiner last week) I now understand that it was suggested by the developer’s son-in-law at the recent public meeting in Castletown that the developer might board up his empty shops.

Each of the following points relating to the suggestion that the shops might be boarded up are my personal opinions which I hope the planning department will take into account when considering the the recent applications.

1. The attempts to intimidate and threaten the authorities with the boarding up of the shops will be counterproductive as it will probably have re-enforced the resolve of the Castletown Commissioners and all the other interested parties to oppose the developers’ applications and will encourage the planning department to reject them.

3. Boarding up the shops would also be counterproductive as it will reduce the commercial values of the properties.

4. Even if the shops are boarded up it will not be long before the shops are sold, the boards removed and the shops opened for business.

5. We should not underestimate the number of potential shopkeepers who decided not to take the risk of exposing themselves to the developers’ actions but who are likely to reconsider the possibility of opening a shop by either purchasing it themselves or by renting at reasonable and stable rents payable in a more secure business relationship to a new owner.

6. The bankers who will have provided most of the project’s funding will not want to allow any action such as the boarding up of the shops to reduce the value of their stake in Callow’s Yard.

7. It is likely that the developers’ bankers will now be wanting to recover the funds that they provided by the sale of the apartments and shops.

8. Whilst the sale of all the properties may take some time, the bankers, or the liquidators that they appoint, will be more interested in achieving quick sales rather than hanging out for high prices so the prices achieved will be low and this will ensure that the premises are attractive to buyers who because of the low price will be able to obtain good returns from modest rents.

9. Because the bankers will have no interest in running Callow’s Yard themselves they will only want to recover the funding that they have provided via the sale of Callow’s Yard and/or from the security that they must have obtained from the developer when they funded the project.

Finally I understand that it was pointed out at the public meeting that Castletown is designated as a retail area in the Southern Plan so it is my strong opinion that the planning committee should now stand firm and reject the recent applications so that the shops in the development will eventually be operated as foreseen when the earlier plans were approved and not be permitted to be converted for residential purposes.

I also continue to believe that the standard of accommodation in the town should not be degraded by permitting the apartments to be converted into a large concentration of disgracefully small units.

Richard H. Bedford, Scarlett Road, Castletown

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