However, he says the Isle of Man can manage the consequences of change in its revenue sharing arrangement with the United Kingdom.

In a statement to Tynwald, Mr Brown warned some 'very difficult decisions' will be needed to come through the situation.

Revision of the sharing arrangement will result in an annual loss of revenue to the Isle of Man Government of at least £50 million from April next year, rising to £100 million from April 2011.

Added to revenue reductions already projected, due to the UK economic performance and lower VAT rate, this means the Island faces an estimated total loss of £90 million in the 2010/11 financial year and £140 million in subsequent years.

With overall net revenue spending estimated at £572.1 million in the current financial year, the chief minister said a potential loss of £90 million next year had 'serious implications'.

>>To download a PDF copy of the Tynwald statement click on this link:
Revenue Sharing Arrangement changes and International developments

Nothing would be excluded in considering how to deal with the situation, he said. Government would examine how it could raise revenue, reduce spending and use reserves in the short-term to overcome the 'substantial shortfall' in income.

Government's priority would be to secure the most important services provided to the community and safeguard the future. Less critical services would be examined, with the possibility of public sector redundancies.

The Chief Minister confirmed that the Customs and Excise Agreement (under which the revenue sharing arrangement is made) was being retained.

He concluded: 'Government is confident that the present re-adjustments within the sharing arrangement, whilst causing serious initial budgetary and public service pressures, especially due to the short notice of the changes, will be managed in an orderly fashion and will ultimately leave us stronger and fitter for the future.'

WHAT DO YOU THINK?
Send your comments to newsviews@newsiom.co.im

YOUR COMMENTS

Gosh, if things are really that bad, we may yet see Members of Tynwald having to pay a groat or two towards the cost of their fully indexed, non-contributory pensions. Who knows, they might even be taxed on the salary top ups that are rather fetchingly called their 'expenses' (no receipts required, boys). Lets not forget, the 'expenses' count towards their final salary pensions as well. 'All animals are equal, but some animals…'
ANGRY MANXMAN

I`d look forward to a full explanation of these new VAT sharing arrangements with the UK,because I suspect that Island residents will accept nothing less than being ever able to see what the true position of the UK is in relation to the Isle of Man. If indeed we have benefitted up to now from these arrangements, maybe it will be hard, but as a "new" resident from the UK of only 12 years, I`d still much rather live here than the UK-even if taxes were exactly the same. So apologies to any disgruntled Manx born people, maybe like the previous commentator, who I suspect, always think the grass is always greener etc.....in the UK - believe me, it isn`t.
BRIAN

Doesn't the Isle of Man have any say in this? What kind of "agreement" is that and who negotiated it on our behalf? It is high time we collected our own VAT and kept it – say yes to abrogation.
STEVE

In your news article yesterday you mentioned that 'net government revenue was £572 million'. I assume this is total tax receipts. In this article you say "net revenue spending estimated at £572.1 million". I thought that the government put aside money each year to reserves. Based on this information it looks like the government spends every penny it gets, I'm sure that's not right (unless they're buying more water coolers than they let on)!
PR

Editor's note: Revenue received by government this year from all sources is £572.3 million and net spending is £572.1 million

Does anyone know the combined cost of having MHK's and MLC's ?
DOUGAL

So on top of the loss of the Health sharing arrangement we now have this VAT situation. Seems to me like the UK is doing it's best to "stuff" us in any way possible. All this on top of the KSF debacle where OUR depositors monies disappeared into the UK and for which the IOM Government is having to pay out. Surely the time has now come to abrigate and break away compleatly, what do we need the UK for ? and what benifit is it to us ? We are self governing so why not just do that. no VAT, the Government could introduce a 3% purchase tax on everything and that should more than cover the previous VAT arrangement with the UK. Then we could be VAT free forever. We have completed most of the capital projects, ie, Hospital, Prison, Power Station, Iris scheme, so capital outlay for the next few years on major projects is unlikely. We have an excellent film business, telecoms, internet gaming, banking industry along with many more successful businesses.
Come on Government, lets make the break and stand up and be counted, we are our own boss.
TOM

It seems that the UK government is turning the screw on Crown Dependencies with what seems like no regard for their effect on British citizens. Anybody who has voted in the UK within the last 15 years can request a postal vote, perhaps the MHK's who visited the recent party conferences would like to summarise their talks so any people with a UK vote can make an informed decision.For the forms to register and vote in UK elections see http://www.aboutmyvote.co.uk/register_to_vote/british_citizens_living_abroad.aspx
ANON.

My only knowledge of this is what I read in your report but isn't this case of our rather weak Government once again just rolling over and accepting what we are told to do by our english masters. We seem to have done this recently with the Healthcare agreement.
How about we start reviewing what we pay to the UK Government, I understand we pay a rather large amount annually for defence. Does our Government have the courage to cease paying that ? Its quite ridiculous, defence from whom ?
I think the sensible first step would have been for our Government to suggest a 5 year hold on this, not 12 mths - 2 years, while the whole thing is negotiated properly, not dictated to us!
I trust the electorate will take all of this into account at the next election. These matters are life changing for our society !
A getting angrier by the day Manxman

For months and months Brown and Bell have being telling us with a smile and a wave not to worry that the Isle of Man was well able to "weather the storm" (search for their press releases). All of a sudden it's panic stations, furrowed brows and re-active measures as the VAT, zero tax and EU investigations all start to bite. What have these fools been doing for the past year? Waiting for something to happen? Where is the forward, pro-active thinking and planning? All we've seen is their unending desire to sign useless tax agreements and conform to some arbitrary "white list" that benefits the big boys and has zero benefit for the island (negative benefit - just ask the fund managers and funds who won't come here because it's over-regulated). Well it's happening boys and now it's time to grow some cahones and stand up to these international bullies. Jersey and Guernsey have joined forces to take a stand but apparently the Isle of Man won't join them as it we would be "assisting our competitors". It's time these narrow minded, blinkered, amateurs got out of Govt before they sell us all down the river. Any chance we could get Sir Gerry Robinson to be the Chief Minister to sort this mess out?
J

I agree - FIRST: find out how much VAT/DUTY we are entitled to under our own right then an informed decision can be made re: reciprocal agreement. THEN: get our finances in order by not funding anything that is not beneficial to the island and its residents. NEXT: Advertise for 400 new multi-millionaire to come and reside here who would each pay £500K maximum tax per annum thereby helping to boost tax revenues
PLUS: Stop all work permits (except for essential sevices) LASTLY: get rid of all the things we don't need - i.e. Governor
SR

Maybe this is the wake up call Manx people need – as a recent come-overI have been told over and over again in the past two years by iom newspapers and politicians and iom banking experts that the place is booming and 'recession proof' and your house prices are just going to go up and up. Well sorry time to wake up and smell the coffee – you are now sitting on potential large scale job losses, a house price slump (your boom was even more manic than the U.k. which is saying something), increased air fares and a restrictive health-care situation which will keep many people trapped here or force them to leave. The politicians have obviously known about this for months but all we get from the media is positive spin. The 0-10 tax agreement is the next thing under pressure – watch the positive spin on this until the last moment when the wheels come off again. A bit more honesty and less spin please.
M. M.

BRIAN It's partly historical. When Governor Loch was Island Governor in the mid Nineteenth century or so he wanted to develop the Island by building a breakwater and jetty for steamers. It coincided with Britain's desire to develop its territories such as the Isle of Man. They therefore came to a sharing arrangement re various duties and taxes. Before then the Island had very little tax revenue to pay for such. They called this The Common Purse and the money was divided up. Later in 1918 Britain ordered the Island to introduce Income tax for the first time to subsidise flour and feed a very poor Manx population. As time evolved post 1945 Britain was happy to let the Island drift off with more autonomy. This process has been accelerated. When we came to the European Community and VAT the Common Purse included this tax and then evolved to a Customs and Excise Agreement. A formula evolved by which the UK ended up paying a notional sum based on the velocity of circulation of money in the Island plus the notional money you spend in the UK, travelling, holiday bookings, mail order etc. The Manx film industry and its crews artificially boosted the VAT element coupled with the fact that film companies were formed and then liquidated almost at once. Huge artificial VAT payments and refunds resulted. This meant the UK was subsidising the Isle of Man. Thus resulted the very latest Common Services Agreement to replace Common Purse & etc. The money shared with the UK subsidised in part the Zero Corporate Tax policy which now upsets the EU so much. The UK has been accused of subsidising a "tax haven" and this has resulted in a very convenient excuse to chisel away at the Island's Finance Sector whilst saving a few bob. The current arrangement means that there is a Customs Union between the UK and thus the EU for most things and if this agreement was terminated the Island would be like Jersey & Guernsey ie no VAT but have to introduce its own sales tax. Jersey has had a hard time with govt finances due to loss of finance services consequent upon tax information exchange. Jersey and Guernsey also complained about the Island's VAT sharing advantages and lack of level playing field etc. If the Island abrogated the customs agreement with the UK then there would be customs and excise posts between the UK and the Island at the airport/seaports. ie Red a nd Green channel. Also, The Island has an industrial sector which says lack of customs union would make life too hard and they would leave. The Island has to diversity and so we have to keep sweet with the UK which after all has the right to legislate over our heads. The constant dragging down of the Island's finances has been well publicised in the Examiner and this onslaught is, like the ending of the NHS agreement, just part of the process. Manx Nationalists want to stand alone. Now they are getting a taste of the future.
BARRIE STEVENS.

It is not surprising that the UK government has taken such a forceful step given that the UK is virtually bankrupt and the Isle of Man continues to be viewed as a "thorn in the side" of UK tax receipts. What the UK Government never mention, however, is that the Isle of Man offers sound economic governance, an excellent quality of life and truly the opportunity for business to flourish and I speak as a "Manxman" returning to these shores after a short absence in the UK. Now is not the time for negativity, inward criticism or "Traa-dy-liooar" – instead we must all pull together, work harder, work smarter, contribute more and protect the quality of life we enjoy. And if you don't believe me, I suggest you pack up, get in your car, get on the ferry and spend some time in the UK.
MONTGOMERY.

The BBC report on this subject states that this new agreement has already been signed. If that's true was the IOM Government a signatory? It's just that the recent announcements from our Government suggest surprise at this change. Is this the full story?
ALAN COOPER

The leader of the opposition in the Republic of Ireland has just promised if elected to abolish the Senate, Ireland's second chamber of the Dáil (Irish House of Parliament) and reduce the number of sitting TDs (Irish MPs) by 20, in addition to reducing all politicians salary by 20%. Why do we need so many MHKs and MLCs to run (ruin?) an island of 80,000? And why do we need such a bloated Civil Service that would put the Soviet Union pre Glasnost to shame?
JAMES MORONEY, Baldrine

A few questions which should be answered ASAP by those in the "Know"?
1 Can the decision regarding the "AGREEMENT" be contested legally?
2 How many jobs within Government are now going to be shed as a "cost cutting" measure
3 Is Income Tax going to be increased in an effort to cut some of this loss?
4 What other measures are going to be taken over the next year or so? Government raiding peoples pensions perhaps?
S&FW

How tragic. Looks like Mr. Brown will only be able to reward John Aspden for decimating the IOM Banking System with a salary rise from 250,000 to 275,000 instead of the 300,000 Aspden was expecting. I hope to God he doesn't quit and start working for the FSA. There are few enough places to trust with our savings as it is.
MARGARETTA

Whilst the actions of the UK government are deplorable effectively reducing Isle of Man government income by 25% with 2 years notice (similar actions in the UK would lead to a total meltdown of the economy which is certainly a risk here too). And the Isle of Man's response has been weak to say the least. It is worth bearing in mind that the Isle of Man blatantly abused the common purse agreement for years. And as such it could be argued that we are now receiving our just desserts. An agreement that was always biased massively in the Isle of Man's favour was systematically (& blatantly) abused to support industries such as film. The film industry apparently raised over £150m in additional tax revenue directly (& unfairly) to the cost of the UK taxpayer. Hence the first crackdown 2 years ago. (Wonder why there are no films here these days?). The schemes devised were simply means of extracting additional revenues from the UK exchequer by abusing a system that had worked in the Isle of Man's favour for years. Those who devised such schemes have much to answer for in relation to the current situation.
BARRY

Looks like our clever, thrifty Government have sold us down the road AGAIN! They should have told the UK govenment to get stuffed. They wont be putting the £600K fence round the airport now because we will need the land to grow vegetables on!
GP

No doubt the real meaning of Mr Brown's comments will be a rise in personal tax rates (amongst other punitive measures). Personally I would like to see a streamlining of public spending. We have more members of Tynwald per capita than any other nation. Do we need that many to represent the voice of the Island? Do we need to spend millions on commissioners housing in upgrades when their accessability is not properly means tested and with no financial input from the occupants? Do millions need to be spent on public enquiries at the drop of a hat which result only in highly paid work for English barristers and no result for the IOM public (Mount Murray and Clarkson rights of way to name but 2)? This Island is a fantastic place to live despite the best efforts of Tynwald. Government accountability would be agood place to start the streamlining process.
DAVE MOORE.

How long will Messrs Brown, Bell and cronies remain in denial? I am not being wise after the event because I have already written many letters to this publication predicting many of these events, long before they became as serious as they are now. It is not difficult when you have an open mind and actually look at all the mounting evidence. I note that the tone of our government has changed from jubilant and smug to worried and even fearful in recent months as the realisation strikes home that the agenda of the major financial "powers" of the world is to crush the major thorn in their side known as the "Isle of Man", oh yes and the other "crown dependency" "tax havens". I will say again what I have said many times before -either the island must become totally autonomous and cut all ties with the UK and form its own banking system like other smart offshore centres – who are prospering – or allow the financial industry and all associated services to die a slow, painful death. If they choose the latter because they lack the courage or ability to do it, then Plan B had better be a very good one. The Isle of Man could actually become a centre of excellence for other industries – e.g. technology, communications, and renewable energy development – but of course the DTI would never support that, they are too busy blowing taxpayer money on highly dubious eCommerce contracts etc. Wake up government, get out of denial, and start planning for the future while the opportunity still exists – which will not be for long. Before long you could be competing in an election for a seat in the Houses of Parliament, and residents here will be paying 50% tax – if they stayed – which they wouldn't.
AC

I've just read the Chief Ministers Statement in full and I have to say that I find it hard to understand why the Island's exporters would have a hard time of it if there were no customs agreement. How likely is it that Manx products would swamp the UK or European markets to the extent that it would be classed as "dumping" and punitive duties & excise imposed? Do the Island's exporters export that much? I doubt it.
ANDY, Onchan

We help could make a start by retaining all the TV License Tax that IOM residents pay to the BBC – taxation entirely without representation. Then there are excise duties that make things like fuel so incredibly expensive (eg for leisure boats). Come on Tony, we shouldn't be taking this lying down, or we just invite more punches.
Regards
EdDD

This whole thing is completely, utterly and unbelievably despicable! How can robbing Peter to pay Paul work and/or be possible in this day and age?? This government (not really an appropriate title) must have seen this coming surely?! I am personally very scared of what is going to happen. A 25% cut in my income would practically finish me off…. So what happens to the island community?? I work for a long established local firm who I believe have acted very sensibly in view of the current economic situation. When we first got wind of a downturn we cut our cloth accordingly and prepared for the worst. Its worked I still have a job (albeit minus a pay rise this year). The government should have and should still be leading the way in preparation of this nature and they clearly have not. And why is the UK so hell bent on delivering blow after blow to a steadfast, loyal jewel in their crown? We need to hear reassurance!!!
NICK

Okay so we are going to have a reduced revenue from VAT, but no one seems to mention the recent changes to the double taxation agreement which means any residents with income in the UK can now opt to pay tax here instead. In effect this means the tax revenue will come to the Island instead of Whitehall! There are many people on the Island who previously paid tax to the UK government who now opt to be taxed in IOM. (People with Occupational Pensions for instance). Has our government taken into account the new revenue from this recent change?
BOB

For the Isle of Man to be threatened by a big neighbour who is experiencing severe financial and therefore political problems is only normal and to be expected. A good example in this respect is the soviet threat against the Baltic States, or, to quote Stalin's foreign secretary Molotov: You must take a good look at reality and understand that in the future small nations will have to disappear (…]." (Molotov in 1940 during a meeting with Vincas Kreve-Mickevicius, a lithuanian writer who asked about the future independence of Lithuania) In this respect, the pressure the UK is going to exert on smaller neighbouring countries can only expected to increase, especially as even the UK's government will most likely realise, military intervention against the Channel Island and Isle of Man is somewhat counterproductive. The Isle of Man Government should certainly take a serious look at the Manx currency being tied to the Pound Sterling as, so I believe, Manx deposits have to be made with the Bank of England to back our currency. A freezing of Manx cash in the Bank of England would even be more devastating for the Manx economy. An example as to the issues depositors with the Bank of England can face, pre-Soviet Estonia is a good example.
H. KESSLER, Onchan

Isn't this the perfect excuse to drop the UK altogether and collect our own taxes (even if it means raising the income tax %)? Also, why doesn't the government move out of Douglas and free up some valuable office space? They could have a purpose built structure which would cut the huge expense of running all of the offices they occupy around Douglas. They want to attract more businesses here from the UK but there are no decent offices available!
TIM

The Govt's inability to deal with this and many issues has shown how amateur they are on the world stage. Hard decisions need to be made and the Govt needs to step up and show they are worth their inflated salaries. The first thing they need to do is get some proper economic and legal advisors with international experience to assist the Govt. I can't believe John Aspden has been given a £25k pay increase after letting a bank fail on his watch. Perhaps Freedom to Flourish should be renamed Fatcats to Failure?
J

What would the financial implications be for the Island be if we became full members of the EU, I would not mind seeing the three legs of man on the euro currency and we would not loose our identity but boost it !!!!
JAMES, Douglas.

How to save £90 million:- Bye bye to:-
New group practice in Jurby
Ramsey Marina
Port St Mary Marina
Sewage Treatment Works in Ramsey and Peel
£20m inner town regeneration projects
Finishing the Douglas Loop Road
Any more improvements at harbours and airport
Any new equipment at the hospital
The new Onchan secondary school
Making the world's most expensive cheese
MATTHEW, Peel

"The MEA loans debacle, airport currency losses, a near £200 million pay-out to KSF depositors, more civil servants per capita than Wogga Wogga, an eye watering public sector pension deficit and a prison allegedly costing 3 times its UK equivalent to run. It would be easy, and highly convenient for some (it won't be long) to suffer an acute attack of selective amnesia, heaping blame on the re-negotiated revenue sharing agreement (and the UK) for all the economic woes now facing this Island. Tough times demanding tough measures for sure - but let's keep things in perspective: given the correct action going forward, the Isle of Man will remain a comparatively prosperous and pleasant place to
live with a lot going for it - the glass is at least half full!"
Nightlinger

This should come as no surprise - the views of Messrs. Brown and Darling on this tax haven in the Irish Sea are well known and it was only a matter of time before they found a way to put it us "in our place". We are being reminded where the real power lies - and it is certainly not on the Island. This looks like the first steps on an increasingly rocky road which will leave all residents worse off in one way and another.
JOHN

Its been obvious for some time now that the UK is no friend of the Isle of Man,so,all I want to add to this debate is "Why oh why do we want to cosy up to a nation that is trying to destroy us?" It really is time for us to go it alone,stand or fall by our own efforts. We can do this,and we should!
ANDY, Douglas.

There are many things mentioned in previous responses which the IOM could do by way of reaction to the UK bullying - may I add another idea.
Tony Brown mentioned everyone pulling together and buying local. There is little point to this when most of the "buying local" is actually going to the UK (main example being Tesco). Now is the time to impose large tax increases on the UK based operations - if they go they go but there will remain some cheap properties and a good market for local business to move into.
Disgusted Manxie

First we had the KSF scandal, second came the ending of the Recipricol Health Agreement. And now they take as much as 20% of our government's income. The current UK government has shown how little it regards the welfare of the Manx people. Sadly there are few ways we can show our anger at this betrayl of our loyalty. We have constantly been the nice guy, saying yes yes yes. They have clearly seen this as weakness. We have taken it on the chin up until now, but surely we cannot let this pass. This could damage the welfare of our island for years to come. Isn't it time the Island sent a much stronger signal to our bigger neighbour? we must show that we have a bit of bite, in one of the few ways we can, I would most welcome a decision to throw the Governor out of Government House as he has shown he is of no benefit to the people of our Island. Perhaps that would inform the UK government and Buckingham Palace of exactly how we feel.
ANONYMOUS

http://www.taxresearch.org.uk/Blog/2009/10/20/the-isle-of-man-loses-140-million-and-still-cant-talk-about-taxing/
J

I have just done a tally of all the VAT and excise duty I pay in a year. I run a small car, dont smoke, like a drink and I pay 4000 pounds a year in excise duty and VAT, multiply that by 100,000 people and that comes to 400 million pounds, ok some dont pay that much and some pay a lot more, when you account for the huge tax (not just VAT) on petrol, booze and cigs which is all shared then it soon mounts up. If IOM opted out The Common Purse Agreement then all goods coming from UK would be VAT free or reclaimed at airport or port, then a purchase tax could be added to it on entry to IOM. All large companies from the UK and operating in IOM would have to pay a local purchase or sales tax but would no longer pay VAT for IOM bound goods as its an export. Maybe its time to look at the Gibraltar model, 8 million tourists a year and a packed Main Street with shoppers and why do they get so many tourists.... most litre bottles of spirits 5 pounds, pack of cigs 95 pence, litre of petrol or diesel 65 pence, there is tax on these items
in Gibraltar but nothing like the VAT and excise duty that the UK has. Due to the strength of the Euro the booze cruise to Calais has almost fizzled out, well maybe the IOM could start it again, opt out of the Common Purse Agreement and set up a purchase tax system where the tax stays here. Gibraltar has a brand new hospital and needs no financial
help from the UK and as their Chief Minister Peter Caruana says "we are doing very nicely thank you"
JOHN

Sirs, While I am certainly no fan of Messrs Brown or Darling, I can't help feeling that The Island has scored a massive "own goal" in stirring up the hornets nest that had, until last year, been relatively quiet. As far as I can tell, IoM collects considerably more VAT than it receives back from the Common Purse agreement. The Gross Domestic Product of the Isle of Man is now £1.8 billion according to the latest data I can find from the IoM government (and the CIA!). Yet, in 2008/09 the Isle of Man expected to collect £339 million in VAT, which represents 59% of its total government income of £572 million. This is a whopping 18.8% of IoM GDP (in UK the same VAT system collects just 5.6% of GDP). That means the IoM, which should actually have a much lower VAT collection rate because of the size of its exempt financial services sector, collects 13.2% more of its GDP in VAT than the UK does using an identical system. From that, it's easy to assume that somewhere about £230 million of the VAT receipt in the Isle of Man is subsidy from the common purse agreement. If you follow the figures logically, based on £420 million a year of VAT collected from a population of 76,500, it seems that every man, woman and child on The Island pays £5,490 in VAT. At 15% VAT rate, that requires every single one of us to spend £42,090 a year on VAT chargeable goods. Taking zero-rated food, taxes, rents and mortgages etc. out of the reckoning that level of spend per head is totally implausible. In fact, it comes out at 178% of the average annual income per capita based on the official figures!!! It's impossible to spend 178% of your income, so we have to start looking for explanations, of which I can think of four possibilities.
1) The IoM data is wrong. Since it doesn't appear to be far out on GDP, it must be the VAT data that is wrong.
2) The Common Purse is indeed subsidising the IoM more heavily than was imagined.
3) The IoM has attracted an artificial tax base and VAT supplies are simply being 'booked' here without the activity taking place here (classic tax haven). So, if The Island operated VAT as does any other distance seller, the VAT would have been collected in UK.
4) If option 3 is right there is another factor to consider. Not only is there a VAT subsidy there is a corporation tax loss too. In fact, based on a 15% VAT rate some £2.1 billion of excess profit must be declared on IoM to justify this level of VAT on turnover that is not actually located here. It's reasonable to assume that this would normally be subject to 28% tax in the UK where the supplies are actually taking place. Curiously, this sum of (possibly) £2.1 billion is probably not taxed at all in the IoM. So it's a tax loss to the UK of £588 million, but of no benefit to IoM!! This all adds up to the fact that the VAT subsidy of about £230 million is undoubtedly real. The VAT that is claimed cannot possibly relate to economic activity actually located on The Island, and the corporation tax loss arising from the artificial relocation of that VAT turnover is costing the UK an additional £588 million a year. I won't go into the claims that The Isle of Man refuses to properly exchange data under the European Union Savings Tax Directive. Some wise heads claim that this costs the UK not less than £700 million a year. Add all this together and the total loss to the UK from allowing the Isle of Man to operate as a "low tax area" is in the region of £1.5 billion a year. Those who benefit are the corporate bodies who make use of The Island's tax laws. Those who lose are the tax payers in UK. Now you can understaand why Messrs Brown and Darling are a little sick! They need to deflect attention away from their own shortcomings and The Island has made itself an easy target.
As others have said before me, we should either do more to "toe the party line" or we should get out of it altogether and "go independent". For the immediate future, if Tynwald plans taking some austerity measures, they could do worse than start with themselves. This is easily the most over-governed lump of rock anywhere in the world. A little less government and a little more common sense and appreciation for other people's money would go a long way to re-establishing the status quo. With Regards
GRAHAM HAMER

Nice timing,VAT dilemma followed up by announcement of a major UK promoter (VAT registered) who will pop in,cash in and take all the revenue and VAT back to the UK! Impressive full DTL embargo/press statements now included in venue hire???!!! Freedom to what exactly??.......
DISAPPOINTED

How can today's news be reconciled with the following article from the 18th 0f May?: http://www.iomtoday.co.im/isle-of-man-business/UK-doesn39t-subsidise-the-Isle.5275582.jp
MARC

I have just read the Chief Minister's statement to Tynwald which raises many important public issues. It appears that the UK Government informed the IOM on the 17th September 2009 that they wished to revise the Customs and Excise Agreement. The Manx public had been given to understand that any revision to the agreement required the giving of two years notice by either side. The Tynwald statement then goes on to say that within the space of less than a month the Manx Government had agreed and signed the necessary revisions with the UK Government. This raises the question why was this all done and dusted with so much haste? No debate in Tynwald and no public discussion. Both Tynwald and the public have been presented with a fiat accompli by the Council of Ministers which has cut out any question of a ligitimate public debate. It would appear to me that Manx politicians are adopting the same attitude to the electorate as their UK counterparts. Get elected and then treat the public with total contempt. How can Messrs Brown and Bell agree to such a fundamental change in the Island's finances without first evaluating all of the options? They have agreed to something and then said that they will now consider all of the options. Surely that is putting the cart before the horse. If we should have received two years notice of any proposed change this would have given our government the opportunity the evaluate the whole question fully before agreeing to any amendment to the existing agreement. There is an urgent need for a public debtate on this whole issue and how it has been dealt with by the Chief Minister and his colleagues. The Manx Government need to publish not only the 2007 Customs and Excise Agreement but all correspondence between the UK and IOM Governments on this subject. If they will not do so then perhaps under the provisions of the UK Freedom of Information Act the UK Government can be forced to publish this information.
CS

The Isle of Man is as British and as English as Lancashire. Now you know! See what they can do any time they like. And what of the several hundred letters to the paper I have written since 1997 when it all began? And the Sunday Opinion shows on Manx Radio? Don't tell me you are surprised! It's all over now for you lot. Sell up (if you can!) BARRIE STEVENS

How come? sure there is a mistake as until yesterday Tony Clown and his friend, Pongo, assured us that everything was fine!!!! I suppose UK saw Tony Clown and his friend, Pongo coming!!!!
WORRIED BY MHKs

I don't want to sound smug from the other side of the world but just as New Zealand here is getting pulled out of recession by our stronger healthier neighbour Australia - which actually is back in growth now and is the least damaged of the major economies, it seems clear that the IOM is going to get pulled down by the U.K. which has been the most damaged of all the major economies. One of the reasons I left the Island last year was the extortionate price of houses and it seems clear to me, although this hasn't been picked up yet, is that the manx housing boom is now over now that redundancies and tax hikes are on the way. This might be good for local people - if they still have jobs. What people need to realise is if the iom loses the 0-10 tax debate which it looks like it will - then you will have a nightmare scenario as banks etc. disappear in short order off the island. As for all the 'Manx go it alone' brigade - get real - the major banks on the island are propped up by the uk tax payer and the depositor protection scheme of the manx govt. has shown itself to be vastly inferior to the uk. the iom hasn't diversified its economy and is almost totally reliant on damaged and discredited british banks, topped off with massively over-inflated house prices. I still have friends on the island and they are all worried - it seems clear that the iom politicians need to be totally honest with their public and put all their cards on the table so people can make rational decisions on their future.
C.C.

The Kaupthing fiasco has caused huge damage to the reputation of the IoM's financial industry. Tony Brown says: "there will without doubt need to be a change of mindset politically.." to deal with the financial crisis. Depositors hope that this change in the government's 'mindset' will lead to a just & honourable settlement of the Kaupthing fiasco. Taxpayers should NOT have to be involved. Either the banks could give a loan or the government should seek one from HM Treasury. In either case the loan would be repaid from recovered assets of the bank, with any shortfall being met by Iceland in respect of the parent bank's guarantee. In fact the government could be quids in on such a settlement! Without a settlement the island's reputation will deteriorate further as expats & others throughout the world simply will not trust the IoM with their life savings. Not only will deposits dry up but people will close accounts. There is a growing campaign DON'T BANK ON THE ISLE OF MAN (now on 3 pages on Google) which is taking its toll as there is evidence that people are not depositing or are closing accounts. The IoM is so reliant on its financial services industry (37% of GDP) that it must get rid of the festering Kaupthing wound if it is to restore confidence in the industry. That highly valued AAA rating will soon be at risk if it doesn't.
JIM

Will someone please ask the politicians or an informed member of the Keys to explain exactly what was agreed some two years ago, and how, if it is an legal agreement between two parties it is possible to vary it so dramatically in such a short time frame. Is it in writing? We the
taxpayers of the Isle of Man, both of Income Tax & VAT, are owed a duty by the politicians & civil servants, who appear to have got it badly wrong, to a complete & detailed explanation of the events which have left us vulnerable to the UK Exchequer. We do not appear to be receiving one. With these comments in mind may I direct you to IOMtoday 18th May 2009 when the Customs & Excise bosses claimed that their figures show that the Isle of Man made a net contribution to the
agreement in each of the last two years. It states " In 2007-08 the Island's share of VAT receipts was about £339 million but the Island collected and so contributed some £420 million to the pool."
In simple terms then the UK Exchequer received £81 million more than it returned to us!! It goes on to say a similar result is expected for 2008- 09. The article names Charles Coue deputy collector in the Customs & Excise Division of Treasury ( IOM or UK ? ) who further states that after a thorough review the agreement is judged - " to provide a fair and equitable share of the revenues as they relate to consumption of goods and services in the two territories". Was he misrepresenting the facts ? How has the position changed so dramatically ? Is it the real truth that the IOM does collect a surplus and if so is the move a purely politically motivation action
to damage our economy to ensure we comply with the UK ( EU ) wishes on our tax structure? May I suggest you invite Mr Coue to comment publicly on his May statement in the light of current events. Finally, if Mr Coue is correct, and as a senior civil servant I have no reason to doubt him, it follows that in fact the Island should be negotiating for more share not less. If such an increase is not agreed then it makes sense to abrogate as the figures tell us we will receive additional monies not less by doing so. Perhaps I'm missing something here ? Yours
ALVIN HARDING, Chartered Accountant

Perhaps its time the Island's millionaires dipped their hands in their pockets and paid some more tax. The £100,000 tax cap they enjoy is a scandal.
CF

What with this and the reciprocal health agreement being changed isn't it about time we turned our attentions away from the UK, has anybody investigated the implications of going it alone or even looking to Ireland? As to the reciprocal health agreement, if services are being cut shouldn't we get a reduction in National Insurance contributions? – No chance.
STEVE

So you are going to lose 50 million next year and 140 million every year there after........ GOOD.... It's time you yessas stood on your own two feet..... what with about one in 5 of the population working for the Government its now time for you lot to hit the dole queue then you'll know what its like to live on £80 a week... I'm just glad I got off ALCATRAZ when I did. Having a Happy Life in the UK.. No rip off prices (petrol. milk. bread, gas, electric etc) It's time you all got on that boat and got a one way ticket! Laughing my Socks off.
T.W.

To Save money: How about the DOT stop spending all this money on the introduction of an Operators License, when they now have an annual test for HGV's, especially when the RTLC already have approximately a £175,000.00 deficit. To Make money: How about the DOT start insisting that local Haulage Companies are used at the runway extension instead of allowing vehicles from companies off the Island to be used. Then the local companies will have more work therefore make more profit and therefore pay more Income Tax = more revenue for the IOM Government. It's not rocket science.
AF

Can someone help answer a simple question? Does Jersey (which has NO VAT), have a financial crisis like Man ? Jersey is a similar size and population to Man and it also has a very busy and prosperous shopping industry. If the answer is no, we need to find out what Isle of Man is doing wrong. Maybe Jersey is making decisions of its own instead of letting Gordon Brown make them ?
RON, Douglas

The time has come to stand alone. There is an agenda to effectively "close the Isle of Man down" from the USA, Europe and the UK. We have already been busy complying with many requests from the OECD and the more we agree to, the worse it becomes. So far we have had to meet a large list of demands to be on the OECD "White List", we have lost the Health Agreement and now there are calls for the removal of the 0% 10% company tax we offer in name of "harmonisation". The removal or reduction of the income from the UK (and this reduction will eventually lead to the cessation of all income from the UK you can be sure) should be the push the Isle of Man needs to consider its position and protect what we have. At things stand the finance sector is in serious danger of being eroded and that is simply not an option for the Isle of Man. It is about time we stood up for ourselves. We've already taken far too much over the Kaupthing collapse and done very little to defend out reputation over Kaupthing incompetence. It should be a concern to everyone how we've fought our corner in the face of greedy investors placing their money with risker institution. Time to stand up and be counted before its too late.
JASON

To Ron, in Douglas. The first thing the Isle of Man needs if it wants to be like Jersey is a New Government A government that can make decisions, a Government made up of common people who have more grey matter between their ears than any of your MHK's and MLC's...... Just think of all the projcets that the government have made a mess of,....... The IRIS scheme , a total cock up and still sewage is pumped into the sea... The reservoir built many years ago and now the water in it is stagnant with only the top 2 feed being fresh enough to flush your toilet with.... The Hospital ended up twice the price and bits of it are falling down today.... The new Court House, they couldn't even make the doorway the right size for the Prison vans to enter, it had to be altered....... It's just a Joke...... your whole government is just one big joke and it's been that way for years and It will be like it for a few more years as nothing will change very fast on the Isle of Man. Just take a look at some of the members selling penny sweets in strand street, couldn't string a sentence together if they had to, thats what you people have picked to run the place..... Half these people came from nothing and are indeed nothing, thats why you are in the position you are in.... You need fresh Blood in there quickly or you will sink and go back to what it was like in the 30's when you were living on Fish and Tatties....... Get A Life for Goodness Sake!.... Wake up and smell the Coffee!
TW

Well, no surprises there then. Another cosy little arrangement falls down and leaves a weak little Politian looking silly and out of his depth.
CW

How to save 90 million and live within your means:-
1. Sell the council houses. Yes its great to go on 2 cruises a year, but the goverment are subsidising your low, rate free, rent. Sell now whilst you can still get a price for them.
2. Remove housing grants - all these did was push up prices even more - totaly counterproductive.
3. Freeze all government pay and hope goverment employeees start to leave, bringing government staff levels down to a sensable level.
4. Stop issueing work perimits - there are going to be enough manx workers available now/soon we do not need anymore Poles (great worker that they are).
5. Stop all big projects. why build a new school when there will be no pupils for it? Why build a sewage plant when no one will be pooing into it.
6. Get rid of some mhk's - what exactly have they done apart from wildly spending money on things that cost 3 times as much as they should.
7. Do not put taxes up - manx people are going to have it tough enough. Savings is the key here, government savings.
This is a drop in income for government, a partial drop. A bloated organisation that needs to tighten its belt. Now does anyone want to buy a house?
RICHARD

There are some interesting comments here, but I think anyone trying to make an informed opinion should firstly read the government pink book www.gov.im/lib/docs/treasury/budget/2009/budget0910.pdf which tells you much more about the state of government's finances. For example, according to this, government had £250 million in reserves as at March 2009 and quite a few externally managed funds which they might be able to use to plug the anticipated gap. Government can do lots more to save money though – making every government department use 'preferred suppliers' such as 2e2 and PDMS who then charge departments 3-4 times more than the going market rate (for a lower quality result than other local companies can produce) would considerably reduce outgoings. It is quite possibly the biggest con going in government at the present time and MHK's should open their eyes to it.
NC

Nobody is blaming themselves for this mess, we voted the MHK's in to make the decisions, therefore we should all take the blame. If you didn't vote, you don't get a say, if you don't like the MHK's then stand yourself to make a difference. Simple.
ELBARTO

I think Tony Brown should have told David Anderson and his little friend Ann Reynolds to buy local when discussing the airport project. Maybe then, I wouldn't have to drive into Douglas and see Manx lorries parked up while English lorries do their work. There are many other things this Government could and should do to help the situation. Stop awarding themselves huge salaries to be a minister, MHK's who are not in Ministerial posts seem to manage on their salary so why should those who are, get whopping amounts of money on top of this because they are in Ministerial positions and making bad decisions on our behalf (Minister of Transport and Tourism and Leisure to name just two) Fat cats spending our hard earned money, I believe it is now the time for you to stand up and be counted and look at yourselves and what cuts you can make to Government before you start expecting us to bail you out of yet another Government blunder.
DISMAYED, Foxdale

Bookings now being taken for Sugarbeet-picking tours in Lincolnshire. Special rates for Isle of Man residents. Apply Messrs. Brown and Bell, small shop owners.
SB

Would it be in our interests to become independent of the UK, in as much as pitching our own Vat or Duty.If we are collecting such huge amounts for the UK surely the revenue collected would be better in our own pot, rather than collecting we would be the benefactors. I am sure the amonts collected would be larger than what we recieve from our UK benefactors. As a footnote it would be interesting if he was still with us, to see what Sir Charles Kerruish would have done about it, one wonders!!!!
SM

Sir, I have read with interest the succession of e-mails from your correspondents about changes in taxation agreements between the UK and the Island. They seem to be based on two misconceptions:
1. That the UK is bothered about your status. It is not a matter of political debate even where I live in Liverpool where we have had a happy and long-term relationship with you and hope to continue to do so. If you want total and complete independence that's fine. Have it and buy those services that you want off us such as consular, health or education in properly constructed contracts. Or if you don't want to buy those services off the UK buy them off Ireland or France or anywhere else instead.
2. That you are being asked to take pain that no-one else is sharing. Not true. Councils in the UK are anticipating a 10% real term drop in income from all sectors over the next two years. This is common throughout Europe. I serve on an international body which represents local government throughout Europe. There is not one European Country where tax revenues are not falling and there will not be consequent cuts in public services and/or rises in taxation.
Whatever you do the Isle of Man cannot hide from the winds of change that are blowing as the result of the recession.
CLLR RICHARD KEMP, Liverpool

I think Mr Brown must think his name is Gordon, as he seems to think he can also make decisions without recourse to other members of his Govt. and more importantly the people he should answer to. How dare he make a decision as important as this on our behalf. We had a referendum on whether Speed Limits should be imposed on our roads and whether Flouoride should be added to our water, so doesn't Mr Brown think this is an even more important decision that the people of the island should have a say on, or does he think we are all so stupid that when told to jump, we say the same as he did to the UK Govt., and that is 'How high?' At the end of the day it will be us the citizens and taxpayers who will have to pay the price for him caving in to their 'request'. Instead of raising VAT on the island for the benefit of the UK, could we not instead impose a sales tax that will be raised on the island and used on the island. After all we are going to have to find extra funds after April due to the cancellation of the NHS reciprocal health agreement and the extra costs that will entail. Why don't we work together with the Channel Island and negotiate directly on behalf of all the islands and get some agreement whereby we can raise our own taxes and be exempt from the UK regime. Especially as the Excise Duties raised are supposed to be in exchange for the UK defending the Islands and we all know what happened in the last war and just how much defence the Channel Island got. At the moment the UK cannot even defend themselves, especially from the 'enemy within' and those waltzing through the open doors. The Channel Islands are also Crown Dependencies, and they don't charge VAT, so why do we? Since April this year they have already had to cope with the cancellation of the NHS reciprocal health agreement, as will we next year. So I am sure if they can do without the UK we most assuredly can, after all we do have the Freedom to Flourish don't we, and that should now mean without the UK and it's interference and demands. Anyway, what benefit do we exactly get from being associated with the UK, they just think we are a tax haven, which we are not, and are just shafting us in an effort to try and sort out their own economic mess.
JC, Maughold

The situation our politicians have placed us in could get a whole lot worse if the cuts don't satisfy international investors.First the MEA then KSF and now the VAT. Meanwhile the spending continued with capital projects going on like we are in boom times.Well thats all finished the spending must stop on capital projects and our reserves built up. The private sector is living in a new competitive environment unfortunately our politicians and civil servants are not.They must reduce head count by freezing recruitment and rather than redundancy be offered wages we can afford.Starting with the guy on £275000 and then work down. We need a new professional level of maybe 3 people to monitor and make these adjustments with the consensus of the people. In my view our politicians have let us down badly and should pay the price by a reduction in numbers and their salaries. We deserve to know how are money is being spent or wasted on non cost effective projects,social housing,prisons,power stations etc.These are a drain on the taxpayer if building and running costs are going up to silly levels.We can't just blame the UK when over the last 12 years all MHK'S have done is dream up new projects to waste ever more money.Without knowing what other interests these MHK'S have one senses a lack of ability to sort this mess out.That is what I find most worrying.
IOM Taxpayer

What are the facts? How much does the Isle of Man raise for the UK by collecting VAT and duties and how much does it get back in the way of a refund and border services or any other service that is lumped into the arrangement. If they get back more than they raise why should I as a UK tax payer pay for it? If the Isle of Man gets back less why should Manx tax payers subsidise me? Could someone give us the facts so we know who is getting a raw deal. One of your readers suggested residents of the Isle of Man who have voted in the UK in the last 12 years should apply for a UK postal vote. Such a course of action would be silly as if you retain your vote in the UK it points to your domicile in the UK and therefore eligibility to pay UK inheritance tax. A few votes from the Isle of Man in the UK will make no difference and may land you with an inheritance tax bill.
LAURENCE

The current situation on the Island,
Problems, Too many Politicians - three words sum this up - House of Keys,
Too many fake "sick" on benefits - of course this suits the government - if you are "sick , then you are not unemployed - helps the unemployment statistics
Too many single mothers on benefits - it is not the job of the state to bring up peoples kids , it is the parents
Too many government employees - almost half of the working population are employed by the governement in some capacity , i.e. civil servants , etc. - we could easily fire 20 per cent of this lot and not even notice
Too may young "unemployed" on benefits
Too many Eastern Europeans - someone please tell me when the Island joined the European Union
Too many in the media behaving like Pravda and spouting the "official" line,
Solutions, Bulldoze the House of Keys - this would have dual benefits - 1. Would rid us of a useless bunch of moneygrabbing no hopers,
2. Solve the car parking problem in Douglas - has anyone tried to find a car parking space in town on a Saturday ? Reconvene a Tynwald at St Johns with people who represent the real views of the Islands population Succeed from our "Crown Dependency" status and declare an independent republic of the Isle of Man and tell Elizabeth Sax Coburg Gotha and her tribe to head back to Germany where they cam from Saor Vannin,
GARRIE PARKER.

Just wanted to say I loved the front page of the Independent.
S

Yes, it's a serious blow, and I can't believe the Govt had not prepared for circumstances such as this. I don't think we can totally blame the non-expert politicians as there must be many more experts behinds them giving opinions. The job of the politicians is to represent the needs of the people not be experts in every subject, they just need better advisors. Also the Govt should stop trying to suck up to the UK when they don't care about us, lets get closer to Europe and the rest of the world if they actually like us more. One thing I must say is that the future generations must not suffer for our mistakes. Education, fitness and health for the young of the Island must be the priority. Everyone else will just have to tighten their belts. We have enough millionaires on the Island, about time they put their hands in their pockets a bit more.
GC

I hope Messrs Brown and Bell have learnt from this latest debacle the inadvisability of rolling over sideways and taking whatever guano they're handed by the UK Government. When Gordon Brown and Darling sequestered Manx funds in a UK bank account, forcing a Manx bank into receivership, and ultimately prompting a massive drain on our reserves, our dynamic duo would have been well advised to trumpet this disgraceful behaviour across the world, and should immediately have issued court proceedings against the UK. They didn't even get the hint when called before a House of Commons Treasury Select Subcommittee where Brown was offered some free legal advice by an incredulous group of UK politicians. Heartened by our fearless politicians' lack of response to the UK seizing Kaupthing's Manx depositors assets, the UK bullyboys have once again sent their thugs to our door, demanding more cash. Or else. What have they threatened you with this time, Mr. Brown? Its our money. Its our Island. We have the right to know. The way to deal with a bully is to bloody his nose, not go run off whimpering into a corner after handing over all your pocket money. When the US colonies broke with Britain, some of their ships carried rattlesnake pennants, beneath which was the caption 'Don't step on me'. Rather than adopting a three legged freak with no head and no brain as its national emblem (rather like some politicians I could mention), the Isle of Man might do better to adopt the rattlesnake approach. In the meantime, its high time for this pair of political inadequates to go. They're way out of their depth. We can no longer manage to make our way in a vicious and unforgiving world when we're governed by a pair of shopkeepers who make all their decisions in a secretive world behind closed doors.
VERY ANGRY MANXMAN