Are large local and multinational retail businesses paying a fair contribution to the island’s economy and society?
Treasury Minister Eddie Teare told the House of Keys that tax on the income of large corporate businesses – the so-called ‘Tesco tax’ – had generated £1.98m in the tax year ending April 2014, of which £1.65m was received during the 2014-15 financial year.
He said: ‘In my opinion, these figures clearly demonstrate the effectiveness of introducing this measure.’
But Chris Thomas (Douglas West) asked if the Treasury Minister believed £2m was sufficient – and whether other sectors should be contributing according to their activity in the Manx economy.
Mr Teare said he could not comment on whether it was sufficient as he didn’t have the information to hand. But he said it was vitally important we don’t ‘impugn the integrity’ of the zero/10 corporate tax regime as this was the ‘cornerstone’ of our economy.
Any extension to that would have to be reported to the EU code of conduct group, he said, adding: ‘If it was deemed to be harmful then it could throw the whole zero/10 regime into jeopardy and I’m not going down that route.’
Mr Thomas said the activity in this sector had fallen by 21 per cent, from £162m to £129m, and queried whether this was linked to the introduction of the tax. The Treasury Minister Eddie Teare said the tax was on profits of £500,000 or more so if there was a slight downturn for companies on the margins they could fall outside the tax net.
Leonard Singer (Ramsey) pointed out the original estimate for income from this tax was £3m. Mr Teare replied: ‘Yes, we did anticipate there would be a considerably higher figure but there has been a downturn in the retail sector.’ He said some operators had undertaken considerable capital expenditure for which they could claim tax relief.