For the first time in 32 years the economy of the Isle of Man (IOM) has contracted. Figures released by Government show that GDP declined -1.5% in the year 2015/16 compared to 2014/15.
e-Gaming and Transport and Communication were the main reasons for the decline during the year, reducing in size by -12.6% and -29.6% respectively in real terms.
Insurance is now the joint largest sector in the Isle of Man economy, slightly larger than the previous main sector e-Gaming, which saw it share shrink from 19.5% to 17.25 %. Insurance grew from 14.9% to 17.5% of the economy.
e-Gaming has come under considerable pressure due to Point of Consumption Tax being imposed in the UK and consolidation in the e-gaming sector causing operators to choose one jurisdiction over another. For example, the Isle of Man lost Paddy Power, one of the largest online bookmakers, following the merger with Betfair.
PokerStars, along with others, have had to licence in various jurisdictions as mainland European countries move toward regulation, causing staff to be re-deployed on a country-by-country basis.
The most surprising item in the paper released by the IOM Economic Affairs Department is the inclusion of illegal drugs within the National Income Accounts. How can that be described as an economic good? How can you quantify something that is illegal and thus secret? It can only be an estimated figure, one capable of plugging a hole in the finance of the economy. But doesn’t it legitimise an illegal activity?
The “Paradise Papers” programme broadcast recently by the BBC in unlikely to help the IOM economy in the future, in spite of the fact that none of the people named in the programme had broken the law. The Times said “If further proof that there is one law for the rich and another for the poor is needed, this is it”.
There are two points here that few seem to consider.
1. Do you value your privacy? Because while it seems okay to illegally hack the offices of Appleby and get away with theft, it can also happen to your local bank, or lawyer wherever you live in the world. Would you want your financial details known to your employer and would you want your employer’s finances revealed to a competitor, thus threatening your job?
2. Do you want to pay more tax? From the debates I watch on TV it seems people are in favour of higher taxes so long as they are the people not having to pay! But as we all know political parties make pledges on subsidies on the run up to an election that can only be paid for by increased taxation. Given the opportunity to tax at will, higher taxes would be inevitable. Low tax jurisdictions are the pressure valve that prevents higher taxes for all. They provide the only brake on irrational government spending.
The Panama Papers was a cleverly orchestrated programme designed to whip up resentment amongst people who have not seen their salaries increase in ten years. But as with all of these things people do not consider the unintended consequences, which will result – higher taxes and less privacy.
So as you go about your business observing the Data Protection Act and the new General Data Protection Regulation (GDPR) (described by the EU as a regulation by which the European Parliament, the Council of the European Union and the European Commission intend to strengthen and unify data protection for all individuals within the European Union (EU)) remember that a hacker delivered stolen information to a German newspaper and he appears exempt from the law, as do the people who received those stolen items.
by Warwick Bartlett