The Isle of Man is sending out a clear signal to its global business partners: 'It's business as usual, we may be operating against the most uncertain business backdrop in a decade but the fundamental indicators of the Island's economy remain robust.'
Presenting his seventh annual Budget, Treasury Minister Allan Bell said: 'All external factors have an effect on the Manx economy and our potential to raise revenues. The US sub-prime problems, international credit crunch and general volatility in the market have led to a downgrading in the world economy. Similarly, inflationary pressures caused by rising energy prices have to be monitored and we must take a different approach to revenue commitments. But looking locally, the Isle of Man is in a very strong position.'
The Minister awarded a new cash outlay for the launch of a number of new £multi-million initiatives aimed at enhancing the Island's skills base and inner town infrastructure.
8 per cent growth
He went on: 'Economic growth is currently running at 8 per cent in real terms - maintaining the Isle of Man's record of continuous economic growth over more than two decades. The outlook for the new financial year is forecast at not less than 6 per cent; unemployment remains under 1.5 per cent - with a record 42,000 plus currently in work and the Island creating 1,000 new jobs a year and consequently strong growth in tax receipts. At the same time, the local property market remains strong with robust growth and no sign of a downturn like that experienced in the U.K..'
Mr Bell stressed that maintaining international good relations was 'pivotal' to growth in the Isle of Man economy. The Island had successfully met its commitments under the E.U. Savings Directive and E.U. Code of Conduct Group. The Government's duty to safeguard its interests in the global business arena had been further strengthened by a series of new bi-lateral Tax Information Exchange Agreements: 'These have been very favourably received and we are in the process of negotiating more,' he said.
True global player
'We remain cognisant of any potential changes internationally - such as could be brought about by a new US Presidency - but essentially we are confident of our place on the world stage. Because of our previous economic success over the past 10 to 15 years, the Isle of Man is now truly a global player and an important part of the international financial community and we will continue to react both pragmatically and speedily to changes necessitated at this level.'
The Isle of Man's elegant answer to charges of perceived unfair tax practices had been to introduce a zero corporate rate for business, Mr Bell pointed out. Its successful implementation had both satisfied international commitments, while at the same time, further sharpening the Island's competitive edge. In fact, the transition to the new regime had been effected so smoothly that a £20 million 'cushion fund' was not needed and the balance was now being transferred to for Capital spending purposes.
Granted own E.P.U.
He revealed the Isle of Man was also in the unique position of being chosen to operate the only VAT Electronic Processing Unit or E.P.U. outside the U.K.
'We have concluded a number of detailed negotiations flowing from the renegotiation of the revenue sharing arrangements, within the Customs and Excise Agreement. One of these is the creation in the Isle of Man of an Electronic Processing Unit, which will allow traders to file and pay V.A.T. and Customs Duty on imports using electronic means. The U.K. has centralised its administration of taxes on imports to just one location and it is a great achievement for us to have negotiated a second one for the Isle of Man.'
'If the E.U. moves towards standardising import and export systems comes to fruition then the Island will be able to offer traders the ability to account for all E.U. transactions through our E.P.U.. It is also important that we could offer these facilities to Isle of Man businesses.
Top class facilities
He stressed the Treasury considered further simplification of the tax system as being of primary concern that was necessary to oil the wheels of international business. Further fiscal changes will therefore be implemented to promote local training and skills, enabling the finance sector to retain its current highly competitive position, he added.
A new steering group, headed by the Chief Minister, will be actively engaged in ensuring town centre infrastructure and facilities meet with 'international standards of expectation.'
'Essentially this is a Budget to boost the economy and stimulate economic growth,' concluded Mr Bell.
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