IT may not yet seem like it, but 2012 might well go down in the history books as one of the most important years in the development of the Isle of Man’s economy in recent decades.
Just when most of us thought that our most important remaining signings of 2012 were the completion of our Christmas cards, the Isle of Man Government has indicated that it intends to sign up a new tax transparency agreement with the United Kingdom, and to complete the formalities early in the New Year.
Whilst to some, such a move might come as something of a culture shock, my view is that the island once again has ‘‘read the tea-leaves’’ correctly and sought to capitalise on both its existing reputation as a co-operative and financially responsible trading partner, as well as to exploit any first mover advantage that may come from the goodwill generated.
Whether you are a fan of tax transparency or not, there can be no doubt that the overwhelming popular sentiment is that, in this time of seemingly unending global recession, everyone is expected to take some of the pain – whether you are a huge corporation like Starbucks or a relatively minor celebrity like Jimmy Carr.
Following the unilateral imposition by the United States of its Foreign Account Tax Compliance Act, or FATCA, on effectively the rest of the world, it was clearly only going to be a matter of time before other governments followed a ‘me too’ approach.
This might well mean a change in the business model for some within the overall financial services community in the island – but at the same time probably will go a long way towards ensuring the island can compete in a sustainable way on the international stage, into the future.
One of the island’s key strengths is its ability to quickly respond to these emerging global trends – hence once again proving that the motto of ‘whichever way you throw me, I will stand’ remains as appropriate today as it did in centuries past.
Part of that response to date has been our continued economic diversification – 2012 amongst other things saw the 500th aircraft being registered in the island, and the launch of what is thought to be the world’s first accredited qualification in the e-gaming industry.
This latter sector continues to boom, contributing over one hundred and sixty million pounds to the Manx Exchequer annually – all of which I am sure is being gratefully received, as the government continues to wrestle with the tensions of meeting society’s expectations of public service, but at an affordable cost.
To some extent, I think we have now finished the ‘phoney war’ over budget cuts in the public sector, and the real impact of our changed financial situation is starting to register – whether that is in relation to tuition fees, social housing or salt barns – the one thing we do know, is that changes have to be made. If only we could all agree on what to change first!
There could be a tendency to get a little depressed if one focused purely on the economic aspects of island life, so we are pretty fortunate that once again 2012 had its share of remarkable achievements, which really showcase the extent to which the island punches above its weight.
Whether it is the gold medal gained by Peter Kennaugh in the London Olympics, or Sam Barks’ transition to the silver screen in Les Miserables, we continue to have much to be proud of within our community.
Looking to 2013 then, what will be on the cards?
Well, in my opinion, there is no immediate end in sight to the global economic malaise.
Indeed, pressure on relatively successful economies such as the island’s, can only be expected to intensify as other economies continue to be under the cosh and start turning over the rocks looking for any sources of additional revenue they can find. However, let’s remember – economies are cyclical and at some point, world economic growth will reignite and the island will see benefits as a result. In the meantime, keep your seatbelts lightly fastened – you never know which way we will be thrown next!