Bankers, lawyers, accountants and investment managers were asked in the survey referred to (run by the Isle of Man Association of Corporate Services Providers and the Society for Trusts and Estate Practitioners, who it should be said, are far from objective observers) what would happen to their firms if corporate tax were introduced. The survey revealed:
- 53 per cent expected that their companies would shrink;
- 32 per cent said their companies would move elsewhere;
- 26 per cent said there would be no changes;
- 16 per cent said they would close their Isle of Man operations.
In addition, 70 per cent believed the Isle of Man’s status as an international finance centre would be adversely affected and 82 per cent said international business would move elsewhere.
The bankers, lawyers, accountants and investment managers surveyed said that revenue would drop by 18 per cent if a tax rate of just 2 per cent were introduced. It would mean that 17 per cent of jobs in the sector would go.
If tax were 20 per cent, they predicted revenue would shrink by 47 per cent. Then 39 per cent of jobs in the sector would disappear.
The jobs most at risk would be administration and support staff. There would be knock-on effects on all sorts of industries, in particular the legal profession who currently rely on international business.
And they predicated wider ramifications:
As people and money left the Island, the value of property would fall.
There would be fewer people travelling to and from the Island, so services would be cut and costs might rise.
Meanwhile, because the tax take would also fall, sustaining leisure facilities would be harder to do.
In all likelihood some of this is true.
Increased taxes would lead to lower revenue collection.
The Laffer Curve.