Positive Action Group - Possan Jantys Jarrooagh

Open, accountable government, rigorous control of public finances, and a fairer society for all.

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Government Finance - Stormy Weather Ahead !

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The latest news from the UK Treasury is that UK tax revenues have fallen significantly this year (down 12.9%) - due, in particular, to

  • a drop of 4.7% in the size of the total UK economy (as the impact of the "credit crunch" of late 2008 hits economic activity and outputs),
  • a major fall in income tax revenues (with the increase in unemployment, and willingness of private sector workforces to accept pay and bonus cuts, or work part-time),
  • a fall in corporation tax receipts (with falling company profitability),
  • and a fall in VAT revenues (with the cut in spending power and consumers paying back their debts).¬†

These are necessary and easily anticipated adjustments given the current stage of the UK economic cycle, and the fall-out from the "credit crunch" - but there are obvious repurcussions on the Isle of Man, with the fall in overall VAT revenue presumably causing a reduction in any payout under the sharing arrangement with UK (and not just from the cut to 15% rather than17.5%).

Has that been officially recognised or acknowledged by the Manx Treasury as yet ?  And what are the Treasury's projections for both revenue and expenditure for this financial year ?  And if there is a forecast shortfall in revenue, what measures are the Government proposing to ensure a balanced year-end outcome ?

And again, given the cut in the VAT sharing arrangements which start to impact upon the Manx economy in 2010/11, just how does the Manx Government justify the belief that the local economy will continue to grow at the 7.5% explicit in its future public sector pension arrangements ?  When even the optimistic Mr Darling is only hoping for 1.5% UK economic growth (from the low point of 2009).

So ..... lots of questions to be answered in coming months, with a public sector hoping to avoid cut-backs and redundancy programmes, a private sector hoping to avoid tax increases, and a Finance Minister stuck in the middle, trying to square the circle......  we live in interesting times indeed ! 

 

The Budget Process - A case for reform

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The proposed PAG submission is at the foot of this memorandum and concerns the Private Member's Bill by Juan Watterson MHK which seeks to reform the Budget Process.

For anyone who has not seen Juan Watterson's consultative paper on the subject entitled 'The Budget Process - A case for Reform' below is a short summary of what is wrong with the current process:

1. There is no opportunity fo public consideration or input before the budget is approved.

2. Tynwald Members receive the Budget (which is, in effect, a fait accompli) on a strictly confidential basis before it is delivered to, and voted on by Tynwald - all in the same day.

3. This process does not stand up well when compared to either best practice or the procedures used by many other parliaments.

Juan Watterson's proposals, again in summary, create modest pauses in the process to allow for:

a) Public Input

b) Time for MHK's to take advice

c) The Budget proposals to be considered by the Public Accounts Committee

d) Opportunity for Members to Submit amendments

Anyone wishing to see the full text, or who wish to make their own submissions, should email This e-mail address is being protected from spambots. You need JavaScript enabled to view it (the closing date for responses is the 18th December 2009)

The following submission has now been made by the PAG:

"The Positive Action Group has considered the paper on Juan Watterson's private member's bill 'The Budget Process - A Case for Reform' and warmly welcomes this initiative. The PAG Charter seeks open and accountable government and rigorous control of public finances and considers the proposed reforms a firm step in the right direction. Our only reservation, which lies well outside the remit of this bill, remains the size of the Block Vote which acts to suppress true consensus and the value of meaningful debate, within our parliament. That said, we trust that this bill will enjoy the support of the house"

 

 

Government response to VAT bombshell

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Given the severity of the VAT ‚Äútax raid‚ÄĚ by the UK on the Island‚Äôs expected income in the next two years, it cannot be a surprise that the Manx Government needs time to evaluate a fully considered response. However, the response to date is one of complacency, of ‚Äútraa dy lioar‚ÄĚ, and the continued protection of self-interest within our bloated public sector. ¬†It also fails to recognise the reality that the UK Government faces a long term financial crisis, with major budget deficits forecast for some years to come ‚Äď and, it has to be suggested, the probability of further ‚Äúsalami slicing‚ÄĚ of the Manx VAT ¬†revenue in coming years. ¬†

 

VAT Bombshell - Captain Stuart McKenzie's 15 point plan

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Reaction to V A T Bombshell

It's almost 2 months since the government was informed by the U K of a severe cut in our V A T income. In response D A F F  recently announced the temporary closing of Farm and Horticultural Improvement and Fishing Vessel Financial Assistance and the Chief Minister has told us that we need to 'shop local'. He also asked us all to come up with ideas for coping with the worsened situation.

 


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