The Manx Nationalist Party - Advocating Republican Independence since 1963
|The following submission was made to the Isle of Man Treasury in response to consultation on the concept of tax-capping wealthy individuals. May 2005|
Mec Vannin is not committed to a single taxation rate, but believes
that there should be a sliding scale and a tax on speculative gains."
The above is current Mec Vannin Policy and in response to the notion that high earning individuals should be attracted to our Island with yet another tier of tax avoidance, Mec Vannin has studied its policies, statements and submissions that are relevant to this and, consistent with all such, utterly reject the proposal. The very depressing part of this is that, from reading the consultation document, it is not the viability of this scheme that is being consulted upon, but merely the level at which capping occurs: Mr Bell has clearly already decided upon this course of action.
As such, it would be possible to leave the submission at that point but there are obviously those in Treasury, most particularly the Minister, who have not learned the lessons of their own lifetime.
This is nothing more than the utterly unsuccessful, discredited and anti-social New Residents Policy revisited. The only result of that policy was that our infrastructure was burdened by tax dodgers, the Manx people were minoritised and our quality of life was, and continues to be, thrown away to accommodate the whims of those who the governments of the day decided were worth so much more than the people they were meant to represent. The only benefactors of that policy were
the tax-dodgers themselves, property developers / speculators, estate agents and accountants.
The Treasury has, as predicted by Mec Vannin five years ago, painted itself into a corner with the suicidal zero tax rate proposal and must now increasingly rely upon individuals' taxes to fund government. It should be patently obvious from recent history that, if simple taxation was the over-riding attraction to the extremely wealthy, we would be sinking even further under the burden of high-demand, low contributing tax-dodgers than we already are.
In actual fact, most "high worth" individuals keep, for tax-avoidance purposes, their wealth at "arms length" and, as such, their taxable income is much lower than their supposed worth. It is surely not our place to tell Treasury the many and varied means by which this occurs.
Furthermore, these people use their wealth to create a lifestyle for themselves which, all to often, is at odds with our own.
The nature of earnings is such that much will have been taxed at source and not elligible for taxation by ourselves.
As the world and the EU in particular move towards clamping down on tax-havens such as the Isle of Man, the liklihood is that personal income will become increasingly difficult to shuffle around.
Referring to the document itself:
"Treasury considers that high net worth individuals make significant contributions to the Island’s economy. At the basic level, these contributions are made via the purchase of local goods and services, but wealthy people relocating to the Isle of Man may also set up businesses that then provide employment opportunities for others."
Successive governments of the Isle of Man have, over the past twenty years at least, actively encouraged non-Manx firms into the Island to the detriment of established Manx, tax-paying businesses. The shareholdings of these imported companies and
consequently most of the profits, leave the Island and will continue to do so. The lack of encouragement for home produced goods in all sectors means that most saleable goods are imported. The notion that the presence of these individuals will benefit our country through personal spending is tenuous in the extreme.
"Dividends paid by trading or investment companies will continue to be taxable in the hands of Manx resident shareholders; subject to the cap should it be implemented."
This, perhaps, reveals that Treasury has at long last realised the insanity of the policy mentioned above but the proposals will not be effective: During the 1970s when the disparity between Isle of Man and UK personal tax rates was at its greatest, the "high worth individuals" did not, for the greater part, immigrate to our country. Nothing has changed.
"It could also be argued that there is a limit to the amount of government-provided services and infrastructure that any person can draw on and this point should be borne in mind when considering whether capping personal income tax is fair or not."
This opens the door to the claim that those who pay for everything out of their own pockets should pay no tax. That is the ultimate in uncaring societies but recent history shows that there are those with sway in the government who would have just such a situation. The whole ethos of this proposal is to halt an equitable redistribution of wealth. That is wholly unacceptable.
"Our tax coding system currently requires the deduction of ITIP from every pound of taxable income above the ‘free pay’ amount. ITIP regulations do not provide for a maximum deduction from remuneration. It is proposed that the ITIP system is not modified. If an individual pays more ITIP in the year than the tax cap amount, they would be able to request a NT (no tax) code or, on assessment, would be entitled to arefund of excess ITIP."
If a person is coded "NT", then they will not pay ANY tax. Now that the ordinary Manx people are effectively to be taxed in advance on the strength of estimated earnings, to exempt the most wealthy from any tax payment is simply obscene.
We reject the proposals and the reasoning behind them.
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