IT appears this column may have a reader in the form of Alfie Cannan.
I must introduce him to my mum.
Mr Cannan has been a bit grumpy about criticism of plans to switch the Tynwald members’ expenses lump sum to make it taxable and incorporate it into their basic salary.
Specifically, he is attempting to portray this as a pay cut.
He calls it that, but others, including yours truly, beg to disagree.
This is on the basic mathematics that, if they’ve added £6,178 to their salary, that’s an increase whether it’s taxable or not. Because expenses are not a wage.
Anyway, I’m rather flattered he decided to send out the following missive to all the Tynwald members last week.
More than one was kind enough to send it out to me, perhaps realising that Mr Cannan had forgotten to include me or the public in the circular.
Here’s what Alfie had to say:
Sir
A journalist accepts a new role with a newspaper in a far off country (let’s call it Examiner Land) on a remuneration package of £42k per annum, which consists of a basic £36k and a tax free bonus of £6k which is paid monthly. The tax in Examiner Land is a straight forward 20 per cent on basic salary. His wife is delighted with his new job.
In the first month, the journalist brings home to his wife his net pay of £2,900.
The following month, the newspaper tells him that they have decided to increase his basic salary to £42k per annum but remove the £6k tax free bonus, effectively increasing his basic salary by 17%. The journalist is delighted with the rise in basic salary and tells his wife the good news, but on opening his salary statement, the wife finds that his net take home pay has in fact decreased to £2,800.00 (as he has now been taxed on the full £42k). The wife argues with the journalist that he has in reality taken a salary cut given that his net pay has fallen. The journalist is adamant he has had a pay increase as his basic salary has in fact risen.
Which one is the King of Spin ?
Well, as a loyal subject of the true King of Spin, I have some questions.
Firstly, did Mr Cannan have to ask his spouse before he decided that the addition of £6k into his basic salary was a pay cut?
Secondly, is he suggesting that a lump sum expenses allowance in the format that has been given to our Tynwald members is actually a tax-free bonus? (I must have been mistaken when I thought it was there to cover legitimately-incurred costs rather than to be considered purely as a bonus addition to income.) It’s a crucial question because a bonus tends to be performance-related and one wonders how many people out there genuinely believe our members of Tynwald deserve to receive a tax-free bonus.
Thirdly, the journalist would still be right in that he had received an increase in his basic salary and presumably he checked out the reason for his £6k bonus when he took the job.
Anyway I’m curious as to which Tynwald member, with all the administrative support available for backbench members, not to mention departmental support available for those who take on a government role, incurred £6,178 of expenses in the space of a year.
If any have the receipts to account for such a high amount, I’m sure the public would love to inspect them.
Regardless of that, I’ve got some ideas, if the Tynwald members are so worried about the ‘pay cut’ they are so magnaminously incurring by adding £6,178 to their basic salary.
Let’s return to the basic premise that an expense account is to cover legimately-incurred expenses, rather than contribute to a person’s income.
They could either:
(a) stop whingeing;
(b) keep the lump sum but make it taxable;
(c) keep the lump sum payment but reduce it by 20 per cent – I’d like to think the people who keep hold of the island’s purse strings may be able to find ways to reduce their expenses by about £1,200; or
(d) go old school, have no lump sum, and claim back legitimate expenses via a register that is available to the public.
I suspect the thought that the public can see exactly what each Tynwald member is spending in taxpayers’ money on their own expenses could have reduced the amount of such claims by an amount that would make up for the cost of administering such a register.
Even if not, I think many of the public would still prefer to know where our money is going.
Should any Tynwald member wish to continue this debate, we’ll all be happy to hear from them. If they need advice perhaps they could go to the Tynwald members’ secretaries or ask some of the many public servants at their disposal, to ensure they don’t suffer any extra expense (not to be confused with a reduction in wage).