THE island must be alert to the uncertainty created by David Cameron’s plan to hold a referendum on the UK staying in the European Union.
This warning came from Chief Minister Allan Bell in his annual ‘State of the Nation’ address to Compliance Institute.
He told 180 delegates as Friday’s briefing at the Mount Murray Hotel: ‘We must be very alert to the uncertainty that may be created by Mr Cameron’s proposals to change the UK’s relationship with the European Union and any possible constitutional issues which may arise from a referendum, recognising the impact that may have on potential investors confidence in the UK.’
Mr Bell pointed out that last year’s conference considered whether the Isle of Man was sitting in ‘the eye of the storm’. And while this year, delegates were asked to discuss if the island was steering a safe passage to calmer waters, this underestimated the environment in which we live and are struggling to understand.
‘To fully grasp the scale of the challenges facing the Isle of Man today economically, fiscally, socially and politically our question must encompass a fundamental belief in climate change, not merely a change in the weather,’ he said.
He said the world had changed with the global financial crisis of 2008, the island had entered this new era with the extra challenge of losing nearly one third of its income through the revision of the VAT agreement.
‘Collectively these changes have confronted the island, our business community and government with an unprecedented range of challenges which will test us all over the next few years,’ Mr Bell said.
But he told delegates we start from a position of strength, with the Manx economy currently growing by around 3 per cent net and is projected to continue growing at a similar pace in the year ahead, while unemployment remains low at 2.3 per cent and government has about £1.5 billion in reserve.
He said: ‘As Chief Minister I can give you my absolute assurance today that government’s commitment to further diversification and continued economic expansion remains central to our long term recovery strategy of growing the economy, rebalancing our finances and protecting the vulnerable.’
Mr Bell said the events of 2008 triggered a radical change in both the public and political mood across the western world and as a responsible government, they would have to be ‘deaf or foolish in the extreme’ to ignore the debate surrounding the morality of aggressive tax planning.
‘What started with a few critical voices has now grown into a crescendo of demand for greater transparency and fairness in tax liability. The debate will not go away and determined action is already underway in many countries to respond to public demand,’ he said.
‘It is my belief that this fundamental change in international, public and political opinion will only continue to grow and now represents a new evolving orthodoxy in relation to the acceptability of the role of the international business centres, such as the Isle of Man which we ignore at our peril.’
Mr Bell said he believed the FATCA automatic tax information agreement was negotiating with the US and the similar agreement it was taking the lead among small international business centres in negotiating with the UK would eventually become the international standard.
‘This decision gives the Isle of Man a golden opportunity to reposition itself, once and for all, as a fully transparent, well regulated international business centre, which can no longer be labelled a secrecy jurisdiction and that these measures will strengthen the Island in the long term.
‘Government will do all that it can to reduce the additional compliance burden that will flow from these agreements,’ he added. ‘We are also very aware of industry concerns relating to non-doms.’