FOR most islanders, Alastair Darling’s first Budget was an unremarkable affair even though it contained some significant backtracking on the tax treatment of ‘non-doms’, the wealthy professionals who make a major contribution to Britain’s commercial life.
Also unremarkable was his reference to the inaccurately termed ‘VAT loophole’ – because there wasn’t one.
Cheap CDs and DVDs in the UK are a big issue for many retailers, who extensively lobby their MP about it, and the blame is generally heaped on operations based in places such as Guernsey and Jersey for allegedly flooding the market with low cost products which do not carry VAT.
The truth is that most of the damage to independent retailers is done by UK supermarkets which sell huge volumes of discs and have the financial clout to offer them as loss leaders.
In addition, it would cost the UK more to collect the tax than it is worth, which is exactly why the exemption was applied by it in the first place. It is no coincidence that a number of other EU countries want to increase the exemption from £18 to 100 euros because it is not worth collecting.
However, as is often the way with political issues, the reality is irrelevant and Treasury ministers are under a lot of pressure to ‘close the loophole’.
From Guernsey’s perspective, it has a huge amount to lose from such misguided attitudes for the perfectly legitimate fulfilment industry here is a big employer, a substantial revenue earner and underpins the Bailiwick’s postal service.
It is good business and the island wants it – especially the employees, many of whom are able to work flexible hours to fit in with family and other commitments.
Officially, however, the States position is one of appeasement towards Whitehall, although there is no indication of where that would end.
Unless Chancellor Darling’s silence means the VAT issue has unexpectedly melted away, this is a big problem waiting for the new States and a true test of its mettle.
VAT issue is lurking
FOR most islanders, Alastair Darling’s first Budget was an unremarkable affair even though it contained some significant backtracking on the tax treatment of ‘non-doms’, the wealthy professionals who make a major contribution to Britain’s commercial life.
Also unremarkable was his reference to the inaccurately termed ‘VAT loophole’ – because there wasn’t one.
Cheap CDs and DVDs in the UK are a big issue for many retailers, who extensively lobby their MP about it, and the blame is generally heaped on operations based in places such as Guernsey and Jersey for allegedly flooding the market with low cost products which do not carry VAT.
The truth is that most of the damage to independent retailers is done by UK supermarkets which sell huge volumes of discs and have the financial clout to offer them as loss leaders.
In addition, it would cost the UK more to collect the tax than it is worth, which is exactly why the exemption was applied by it in the first place. It is no coincidence that a number of other EU countries want to increase the exemption from £18 to 100 euros because it is not worth collecting.
However, as is often the way with political issues, the reality is irrelevant and Treasury ministers are under a lot of pressure to ‘close the loophole’.
From Guernsey’s perspective, it has a huge amount to lose from such misguided attitudes for the perfectly legitimate fulfilment industry here is a big employer, a substantial revenue earner and underpins the Bailiwick’s postal service.
It is good business and the island wants it – especially the employees, many of whom are able to work flexible hours to fit in with family and other commitments.
Officially, however, the States position is one of appeasement towards Whitehall, although there is no indication of where that would end.
Unless Chancellor Darling’s silence means the VAT issue has unexpectedly melted away, this is a big problem waiting for the new States and a true test of its mettle.
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