18 September 2011

I wondered in this post if the Biscoe-Howells study of whether Cornwall could learn in autonomous governance from Guernsey would take into account the financial model which underpins the economy of the island (and Jersey).

That model is largely about Guernsey as a tax haven for the rich of course; but there is an aspect that I should like to note.

Last week in the Commons Jonathan Edwards, a Plaid Cymru MP, asked the UK Treasury when it was going to stop the low VAT (low value consignment relief) levied by the Channel Islands on entertainment products, such as music disks, a scheme that is harming shops in Britain (Hansard 12 September 2011 column 1044). The government said it is looking into the issue which might mean action is forthcoming or nothing will happen as nothing happened on this under Labour.

Edwards also asked how much the Channel Island VAT policy is costing the UK in foregone revenue. The answer was £130 million in 2010 and nearly £600 million over the last five years.

Does the study take into account this scheme and its possible end?

Take a look at this post on Richard Murphy’s Tax research blog – and the comments. Murphy has also written about the Isle Man and VAT.