THE Isle of Man is insignificant to the United Kingdom – that’s the view of the Island’s Treasury Minister Anne Craine.
On Tuesday she revealed that the Isle of Man would lose £75 million of its income per year after the Manx Government accepted a revised VAT Revenue Sharing Agreement.
Following 10 months of negotiations between the government and HM Treasury Mrs Craine said they had “reluctantly” accepted the revised deal in order to retain the Island’s Customs and Excise Agreement.
According to Mrs Craine this agreement is important to the long term economic and financial interests of the Island.
She explained: “After nearly a year of negotiations we have reluctantly accepted a reduced revenue share at the price of retaining the Customs and Excise Agreement.
“We understand that this is not a situation that any of us would wish to be placed in but we do think that the price to pay – the potential loss of the Customs and Excise Agreement – would have been too high to have gambled from the Isle of Man’s perspective.
“I think it’s very difficult for us to realise as a proud, small, independent nation, just how insignificant we are. This is a major issue for us here in the Isle of Man. The point that came to us from the UK Government is that it is not a particularly major issue as far as they are concerned – they can take or leave the arrangement. They don’t see it as being of fantastic benefit to them.
“They are prepared to run with this arrangement but if it was going to become protracted and if we were going to continue to argue for a better deal, which they did not see as being fair, they made it clear they were ready to walk away from the agreement.”
The new Revenue Sharing Agreement means the Isle of Man will lose 14 per cent of its annual income. This year revenue will be reduced by £30 million, next year by £50 million and from then on there will be a reduction of £75 million per year.
Mrs Craine admitted that there would be difficulties ahead as a result of the decision. She said: “It does mean of course that things are going to be difficult and we are going to have to face some pretty tough challenges.
“Government is intent that the way forward should be to protect those in receipt of our services and those who are most vulnerable in our community. But at the same time it’s very important that we have the ability to develop our economy.
“We believe that in agreeing to this new formula that has been implemented that we will be able to do that and we will find a way forward that will provide for greater economic development for the Island for a more certain and stable