23 Oct 2003 Tynwald Hansard 187 Orders of the Day Taxation Strategy

TYNWALD COURT, THURSDAY 23rd OCTOBER 2003 32 T2003/4 Volume 121, No. 3 ISSN 1742-2256 T Y N W A L D C O U R T O F F I C I A L R E P O R T R E C O R T Y S O I K O I L Q U A I Y L T I N V A A L P R O C E E D I N G S D A A L T Y N (HANSARD) Douglas, Thursday 23rd October 2003 Published by the Office of the Clerk of Tynwald, Legislative Buildings, Bucks Road, Douglas, Isle of Man. © Court of Tynwald, 2003 Printed by The Copy Shop Limited, 48 Bucks Road, Douglas, Isle of Man Price Band H 186 T121 TYNWALD COURT, THURSDAY 23rd OCTOBER 2003 Present: The President of Tynwald (The Hon. N Q Cringle) In the Council: The Attorney General (Mr W J H Corlett QC), Hon. C M Christian, Hon. P M Crowe, Mr D F K Delaney, Mr D J Gelling CBE, MrJRKniveton, Mr E G Lowey, Mr L I Singer and Mr G H Waft, with Mrs M Cullen, Clerk of the Council. In the Keys: The Speaker (The Hon. J A Brown)(Castletown); Mr D M Anderson (Glenfaba); Hon. A R Bell and Mrs A V Craine (Ramsey); MrREQuine OBE (Ayre); Mr J D Q Cannan (Michael); Mrs H Hannan (Peel); Hon. S C Rodan (Garff); Mr P Karran, Hon. R K Corkill and Mr A J Earnshaw (Onchan); Mr G M Quayle (Middle); MrJRHoughton and Mr R W Henderson (Douglas North); Hon. D C Cretney and Mr A C Duggan (Douglas South); Hon.RPBraidwood (Douglas East); Hon. A F Downie and Hon. J P Shimmin (Douglas West); Capt. A C Douglas (Malew and Santon); Hon. J Rimington, Mr Q B Gill and Mr P A Gawne (Rushen); with Mr M Cornwell-Kelly, Clerk of Tynwald. Business transacted Page Leave of Absence granted ................................................................................................................................................. 187 Welcome to Polish students ............................................................................................................................................... 187 Orders of the Day Taxation Strategy — Motion carried................................................................................................................................... 187 Consultancy Review of the Isle of Man s Meat and Dairy Sector —Amended motion carried ........................................ 191 Tynwald Management Committee — Broadcasting ofT ynwald Court —Debate commenced .......................................... 202 Tynwald Management Committee — Broadcasting ofT ynwald Court — Debate concluded — Motion carried................. 205 Joint Committee on the Emoluments of Certain Public Servants —Amended Motion carried ......................................... 209 Standing Orders Committee of Tynwald —Addition to Standing Order 2.4 approved .................................................... 226 Standing Committee of Tynwald on Constitutional Matters — First Report received and recommendations approved... 226 Tourism Development Fund (Amendment) Scheme 2003 approved ................................................................................ 237 Plant Health Act 1983 — Plant Health Phytophthora( Ramorum) Order 2003 approved .................................................. 240 Sea-Fisheries Act 1971 — Sea-Fisheries (Lobster and Crab Etc. Licensing) Bye-laws 2003 approved ............................ 240 Agricultural Wages Regulations 2003 approved ............................................................................................................... 240 Social Security Act 2000 — Social Security Legislation (Application) (Amendment) (No. 18) Order 2003 approved.... 241 Social Security Act 2000 — Social Security Legislation (Application) (No. 19) Order 2003 approved............................ 242 Pension Schemes Act 1995 — Pension Schemes Legislation (Application) (Amendment) (No. 4) Order 2003 approved ..... 242 Manx Heritage Foundation —Appointment approved ....................................................................................................... 243 Petition for Redress of Grievance of Mrs Carolyn Susan Nicholson — Motion withdrawn.............................................. 243 Petition for Redress of Grievance of Philip John Kermode — Select Committee appointed............................................. 244 Review of Bus Service for the New Hospital —Amended motion carried ........................................................................ 247 New Hospital Prosthetics Clinic — Motion withdrawn...................................................................................................... 251 Villa Marina — Douglas Corporation former employees outstanding pay —Amended motion carried — Select Committee appointed251 Villa Marina —W urlitzer Organ —Amended motion carried ............................................................................................ 256 Respite Care Beds for the Elderly —Adjourned to next sitting ......................................................................................... 267 House of Keys Broadcasting Report of the Management and Members Standards Committee — Motion lost........................................ 267 Corrigendum...................................................................................................................................................................... 268 Orders of the Day TYNWALD COURT, THURSDAY 23rd OCTOBER 2003 187 T121 only contain a way forward in relation to the EU’s Savings Tynwald Directive, but also set down the standard that the Isle of Man will adopt in relation to exchange of information The Court met at 10.30 a.m. generally. Let me turn first to the recommended response to the Savings Directive. Mr President, this is an EU initiative PRAYERS and we are not part of the EU, and the provisions of the EU The Chaplain of the House of Keys Treaty relating to taxation do not extend to the Isle of Man. Why then, along with the Channel Islands and other associated territories, do we find ourselves having to even [MR PRESIDENT in the Chair] consider the matter? Our understanding is that there has been a deep-felt concern by EU members that, if the dependent and associated territories of the member states did not adopt the same measures for savings income, LEAVE OF ABSENCE GRANTED individuals resident for income tax purposes in those member states would simply avoid them by placing their The President: Hon. Members, the Hon. Member for investments within those offshore financial centres. This Douglas East, Mrs Cannell, will be absent today through would defeat the whole intention behind the initiative, which illness. was to secure the effective taxation of the savings income arising to EU residents. This concern also extended to Switzerland and the United States, Andorra, Liechtenstein, Monaco and San WELCOME TO POLISH STUDENTS Marino. For those countries equivalent measures were to be sought. It is understood that the initiative will also be The President: Hon. Members, before we start our raised with other significant countries, such as Singapore business of the day, you will notice that we have a gathering and Hong Kong. of young people in the public gallery and we welcome, There was then a debate as to how effective taxation indeed, the young students from Poland to our sitting this could be achieved. The United Kingdom and a number of morning. (Several Members: Hear, hear.) other countries were in favour of exchange of information. Others felt that a withholding tax at a sufficiently high rate would achieve the same end objective and, initially, a rate of 35 per cent was proposed. After extended negotiations and for reasons that suit the economies of individual members, the end result was a transitional model. It provides Orders of the Day for 12 member countries and any accession states to the EU to adopt exchange of information. Three member countries, namely Austria, Belgium and Luxembourg, will Taxation Strategy adopt a transitional withholding tax. Motion carried It was during the Members’ discussions over this transitional approach that the United Kingdom agreed to The President: We turn now, Hon. Members, to our promote, within the framework of its constitutional Order Paper and, on completion last evening of item 15, arrangements, the adoption of the same measures set out in we now turn to 16, the Taxation Strategy. the Savings Directive and the code by the relevant dependent I call on the Minister for Treasury to move. or associated territories. I have already outlined why this was considered an Mr Bell: Mr President, Hon. Members will recall at the important requirement. Equally, failure by the UK to agree January Tynwald I made a statement about the progress to such a measure would have put at risk what the UK was being made within the European Union towards achieving seeking to achieve, namely the adoption of its proposal that unanimity over a direct taxation package. automatic exchange of information was the way forward. That package included measures which provided for a From the outset it has been made clear that the uniform system of business taxation and a process for the Government is concerned about the consequences of a tax effective taxation of individuals resident in an EU member package determined outwith the Island and in respect of country on savings income arising outside the individual’s which it has not been able to make any direct input. country of residence. That package was finally adopted by However, the Government has shown that it firmly believes the EU members in June this year and I was able to issue a in the process of constructive engagement, as demonstrated statement, setting out the Isle of Man’s response. by the ongoing response

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