Murphy says 'my campaign is over'

The Isle of Man can expect to hear no more from its bete noire, Richard Murphy, on the subject of the VAT revenue sharing agreement.

The United Kingdom media is reporting the government there has withdrawn a total of £200 million in yearly payments from the Island, a move that will force major changes to the way the Crown dependency operates.

It says the loss represents approximately 40 per cent of the Manx government's yearly income and may lead to public services pension reforms, pay freezes, cuts and a change to the Island's tax policy in an effort to balance the books.

Since 1979, the UK and the Isle of Man have pooled VAT receipts under what was known as the revenue-sharing Customs and Excise agreement.

A report goes on to say that an independent investigation in 2007 by Murphy, founder of the Tax Justice Network, revealed the Manx government was receiving three times more revenue than it appeared to be entitled to, because it was proportionately more structured to VAT-exempt activity than the UK.

His campaign to have the so called 'hand-outs' stopped is believed to be behind the UK Government's decision to withdraw more than £100 million in 2009 and now £75 million.

On his blog, Mr Murphy has written: 'When I first looked at the subsidy the UK gave to the Isle of Man through its VAT sharing agreement, I came to the conclusion that the sum involved exceeded £200 million a year.

'In 2009, the UK government removed £140 million of that subsidy a year.

'On Tuesday they announced their intention to increase the withdrawal of subsidy to a total of £215 million a year, (which is) very close to the sum I first calculated.

'Justice has been done, I am pleased to say. A subsidy to an Island that did not need it so that it could undermine the effectiveness of the operation of the UK's tax system has been removed.

'This move does not in any way impact on the fiscal status of the Isle of Man but it does require that it raise its own revenue to pay for its own government in future, if it insists on pursuing its wholly unacceptable taxation policies.

'I am pleased.

'I am also pleased to have been credited (by the Isle of Man government) with playing a part in this.

'And I am pleased that, yet again, my estimates have been proven remarkably accurate.

'On which basis I continue to forecast that the resulting economic crisis for the Isle of Man will force it, like Jersey and Guernsey to radically overhaul their economic policies and their tax haven status sooner rather than later.

'And that's the best news of all for the UK, our economy and in due course for these islands and the people who really want to live in them rather than to abuse them.'

Mr Murphy says his campaign on the issue is over.