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2 Businessupdate Isle of Man Examiner, March 2006 INDEX COMMENT NICK YATES nick.yates@newsiom.co.im FORUM ISSUES AND OPPORTUNITIES A step ahead of the Channel Islands PAGES 3-6 SPECIAL FEATURE Young Enterprise expanding PAGE 7 CENTRESPREAD Island needs to embrace science PAGES 10-11 REGULARS Business & Pleasure Picture special PAGE 15 Your Portfolio Equities and property PAGE 17 Books She’s an entrepreneur, not an apprentice PAGE 19 Turning the tables on a tax handicap Congratulations should go to Allan Bell and his team for listening to the needs of the business community and taking the bold step of implementing some serious tax reforms. The zero-tax strategy and income tax cap have been criticised by some as being more for public relations gain than concern for the Island population. Others have said that none of this will benefit the average man in the street. These arguments are flawed. It is true that the Budget announcements did receive publicity across the British Isles and beyond. It’s also true that the changes are designed to be attractive to high earners and the super-rich. The flip side is that when new businesses and people move here (attracted by the tax changes) they will be injecting an awful lot of wealth into the Manx economy as well. In my experience most millionaires WELL DONE: Allan Bell’s tax initiatives have put politicians in the Channel Islands under pressure or business owners like to spend money as well as make it. If they move to the Island they will bring their families. They will spend money in shops and restaurants, buy flash cars and even flashier houses, they will need investment advice, bank accounts and advocates — they may even buy a newspaper every now and again. If they set up a business they will create employment and even though they don’t pay corporation tax, there are other ways in which they will contribute to the government’s tax coffers, be it VAT, income tax or withholding tax. Some people complain that the Island’s rising population has meant a shortage of dentists, a rise in crime and a loss of the Island way of life. These are just narrow-minded and blinkered viewpoints. Bigger and better public services must be funded by the government and these initiatives will allow Treasury to raise the required money without hitting the present Island population where it hurts most — the pocket. A bigger population will also mean more bars, restaurants, culture and a more cosmopolitan society, to the benefit of every person — be they Manx, comeover, stayover, or visitors. The vicious circle of not enough people to support more facilities and not enough facilities to attract more people will finally be broken. The Channel Islands have always claimed a position as our more sophisticated offshore neighbours, but it may not be long before we have a better nightlife as well as a better tax system than our friends down south. Is that a bead of sweat I see on the furrowed brows of Messrs Morgan and Walker — my word I believe it is! Island Online New Windows opening PAGE 16 CONTACTS Editorial Nick Yates 695689 nick.yates@newsiom.co.im Penny Kay pennykay@manx.net Advertising Sonya Watterson 695668 sonya@newsiom.co.im Layout & design John Sherrocks 695602 john.sherrocks@newsiom.co.im PHOTOS Cover shot by Mike Wade and artwork by Ray Lister. Debate photos by John Maddrell BROUGHT TO YOU IN ASSOCIATION WITH SIX OF THE BEST AIRCRAFT Simon Hull is managing director of Alliance & Leicester International. He got his private pilot’s licence (PPL) while training at Biggin Hill airfield in Kent. He has clocked up 148 hours’ flying time including nine hours of solo flying. 1Grumman AA5-A Cheetah: There is no better aircraft in which to learn to fly. It has low wings, is very stable and has been described as having the responsiveness of a fighter! 2Cessna C150: A two-seater aircraft found at many UK and US flight schools. It is sometimes difficult to convince nonflyers it will fly, but it does. 3Cessna C172: This is a Skyhawk four-seater tourer with a useful load, excellent low-speed handling and unsurprising stall characteristics. It feels like a real aeroplane even though the wings are in the wrong place. You do however get great views of the ground. 4GF 109: The German-built Grob is a pleasure to fly if you are lucky enough to find one. The TOP FLIGHT: The Grumman AA5-A Cheetah RAF bought a few as elementary trainers. I got lost in one of these near Cambridge in 1996. 5B737: Is a large mid-range commercial aircraft, comfortable and fast but not for the inexperienced. I have never flown one but would like a go. 6Diamond Katana DA20-A1: A very quiet and easy to fly trainer. This is the first aircraft I have flown with GPS! A 41 knot stall speed makes this a real pleasure to fly with the engine off.
Isle of Man Examiner, March 2006 Businessupdate 3 ISSUE MARCH focus TAX THE BUSINESS UPDATE FORUM A step ahead of the Channel Islands The Island’s innovative new tax strategy should help the Isle of Man pull ahead of rival jurisdictions, as Penny Kay discovers at this month’s Business Update Forum. Next month, two important initiatives — a zero corporate tax regime and a cap on personal income tax — will come into effect, which should assist in attracting more business and investment in the Island. These initiatives, coupled with proposals for a new Manx corporate vehicle, generated much debate among the Island’s financial community at this month’s Business Update Forum. High levels of interest KPMG’s GREG JONES: There are many inquiries coming through at the moment and the zero tax strategy has attracted a lot of interest. Whether the new business created will completely cover the potential leakage (loss of revenue), whatever that amount may be, it is difficult to say. We also need to try and get a handle on how economically we will benefit from the new business, which replaces the old tax revenue. If people set up businesses in the Island to take advantage of the zero tax strategy, we are looking principally at revenue raised by VAT. There is probably a significant amount of advisory fees generated as well and these advisers will also pay large amounts of tax. Treasury’s COLIN GOODWIN: We also need to bear in mind the origins of this. The zero rate has been introduced to deliver the Island’s commitments in the international forum. While there is a cost, and whether it achieves it or not, we have to recognise that this was the Isle of Man’s solution to our international obligations. It will be difficult to work out over time the extent to which we cover the gap or otherwise. In order to do that, we would have to look across all forms of taxation and other government receipts. But we must not lose sight of the fact that this puts us on an international platform, which is acceptable from all aspects. PKF’s PHILLIP DEARDEN: We are wondering if the revenue generated by the new tax regime will be the same as before TO PAGE 4 KEITH WOODS
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