Minister Craine confirms major £75 million VAT loss

A significant and unwelcome move - that's how the announcement of reductions in the VAT revenue has been described by the Islands Treasury Minister.

It's been revealed that the Manx Government are going to have reduced income of £30 million in the current financial year, £50 million next year and £75 million every year after.

After ten months of negotiation the Isle of Man Government has accepted a reduced share of VAT revenues in order to secure the Island’s Customs Agreement with the United Kingdom, Treasury Minister Anne Craine has just told Tynwald.

The UK Treasury was ready to terminate the Agreement, which would have been bad news for local business and residents as it would have meant there would be customs barriers between here and the UK.

So the UK wanted to achieve what it regarded as a more fair and equitable revenue sharing arrangement.

The result of that is major reductions in projected annual revenue of 14%.

The Manx Government is already working through a budget rebalancing strategy to deal with a £114 million shortfall in projected annual income following the last revision of the revenue sharing arrangement in 2009.

Minister Craine has said it will mean challenging times for the Island into the future, and further it will require tough decisions to be made by the next Tynwald and Government.

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