C B I Attacks Britain's Tax Regime

[Albert Tatlock]

According to the BBC News "An expensive and complex corporate tax regime is hitting the UK's reputation as an attractive business location, according to a CBI survey."

 

Forget 'Freedom to Flourish' - don't we need to take advantage of this glut of free publicity about high UK tax, and market to some of the high tech and specialist companies we want to attract to the island - NOW - and get them relocating to the island?

 

Dust off the database printer and get moving guys! Money talks!

 

Plus it would also save me a fortune in boat/train fares.

 

 

 

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[VinnieK]

Forget 'Freedom to Flourish' - don't we need to take advantage of this glut of free publicity about high UK tax, and market to some of the high tech and specialist companies we want to attract to the island

A good idea in principle, but I think this statement:

Plus it would also save me a fortune in boat/train fares.

suggests why such an effort would be fruitless. It'll take more than low taxes to bring weighty high tech companies to the Island, and we're not the UK's biggest competitor for that same reason. It requires good, relatively cheap logistics, access to a highly scientifically educated workforce, along with opportunities for collaboration with major scientific centres

 

There's a good reason why Microsoft set up in Cambridge and Hewlett Packard opened up in Bristol as opposed to the Isle of Man. Sure the Island can offer them low taxes, but both those cities regularly churn out a large number of high quality graduates to work in their labs, as well as offering them the chance to cooperate with some of the top scientists in the country. If Britain's tax policy turns away high tech companies it's far more likely they'll set up in prestigious university towns in Eastern Europe countries that can offer them low taxes, rather than move to the Island where they'll instead have to spend on logistics, transportation, and see potential difficulties in recruitment and collaboration.

[Albert Tatlock]

Forget 'Freedom to Flourish' - don't we need to take advantage of this glut of free publicity about high UK tax, and market to some of the high tech and specialist companies we want to attract to the island

A good idea in principle, but I think this statement:

Plus it would also save me a fortune in boat/train fares.

suggests why such an effort would be fruitless. It'll take more than low taxes to bring weighty high tech companies to the Island, and we're not the UK's biggest competitor for that same reason. It requires good, relatively cheap logistics, access to a highly scientifically educated workforce, along with opportunities for collaboration with major scientific centres

 

There's a good reason why Microsoft set up in Cambridge and Hewlett Packard opened up in Bristol as opposed to the Isle of Man. Sure the Island can offer them low taxes, but both those cities regularly churn out a large number of high quality graduates to work in their labs, as well as offering them the chance to cooperate with some of the top scientists in the country. If Britain's tax policy turns away high tech companies it's far more likely they'll set up in prestigious university towns in Eastern Europe countries that can offer them low taxes, rather than move to the Island where they'll instead have to spend on logistics, transportation, and see potential difficulties in recruitment and collaboration.

Depends on what you produce surely? Most high tech stuff is fairly lightweight these days, and even if it costs an additional £10 to ship a low volume specialist piece of kit worth several £thousand, I for one wouldn't worry too much. I am also reliably informed that much modern software can fit onto CDs these days.

 

In these days of work-at-home interweb connectivity, and for people looking for a quality way of life, the island makes for an ideal base. These are the types of people we should be encouraging here IMHO. Great if they can offer software and other specialist apprenticeships to local school leavers.

 

I'm sure there are several entrepeneurs that could take advantage of the island, and that there are many UK graduates that would prefer to work on the island than in Eastern Europe in countries such as 'Lower Jobrobistan' etc.

 

 

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[VinnieK]

there are many UK graduates that would prefer to work on the island than in Eastern Europe in countries such as 'Lower Jobrobistan' etc.

 

That's not the point I was trying to make about Eastern Europe. Countries like Poland, the Czech Republic and Hungary, not to mention the Baltic nations, are capable of producing graduates every bit as good (especially in Engineering) as those in the UK thanks to the keen emphasis and support of Science under rule of the Soviet Union. Even ignoring this, and assuming that Hi tech companies would still want to lure in UK graduates into employment, I think you're being rather optimistic about the appeal of the Island to young graduates.

 

Compare the following prospects:

 

1. Work in the historic and beautiful city of, say, Prague for a couple of years performing research, some of which in tandem with scientists and engineers from world ranked and ancient Charles' University. Or how about Hungary?

 

2. Come to the Isle of Man! It's half the size of Swindon and just as fun packed! We have a street, a street with shops on it! and once you're sick of that it'll cost you a mint just to get to Liverpool.

 

The last thing most recent graduates I know would even think of, never mind consider, is a career on the Isle of Man. It's simply not the kind of place that attracts them, and a couple of high tech names isn't likely to change that.

 

Hi tech companies already put up with the relatively high taxation of the UK precisely because the benefits, (namely good universities, ready access to graduates who want to work and live in the cities they studied in), of operating there outweigh the costs, which is precisely why big league high tech companies and industries haven't already approached the Manx government with proposals for setting up here. If taxation ever negated these benefits these companies can set up shop in the less tax heavy areas of Europe, where they have access to equally good graduates, good scientists, as well as being able to appeal to the more adventurous graduates from around the continent who feel like a few years or so away.

[Albert Tatlock]

I think you're being rather optimistic about the appeal of the Island to young graduates.

What's this got to do with young graduates? Most young graduates are a waste of space anyway until they have a few years experience under their belts. There are plenty of companies run by 30 somethings all the way up to sixty and more somethings - and responsible graduates in their late twenties are willing to come here. I am talking about small companies not monsters that need 30 graduates a year etc.

 

There are many such 5 - 50 people size operations in the UK run by a couple of graduate/non graduate owners, and a variety of skilled and semi skilled staff. That would be my target, as IMHO, these are the people that need to be part of the last 20% allowed into the island - in order to maintain a balanced economy. Not just a load of semi skilled adminstrators for the finance sector.

[VinnieK]

There are many such 5 - 50 people size operations in the UK run by a couple of graduate/non graduate owners, and a variety of skilled and semi skilled staff. That would be my target, as IMHO, these are the people that need to be part of the last 20% allowed into the island - in order to maintain a balanced economy. Not just a load of semi skilled adminstrators for the finance sector.

 

But where are they? The incentives provided by the Manx Government to lure hi tech industries over here is a matter of record, being published in both The Registry, and by ZDnet, and if there's one thing that the Isle of Man is known for is its stance on tax. It's surprising then that the influx of such industries is as low as it is. The fact remains that for smaller companies, especially industry, short transport links and simple logistics is even more important, since they lack the ability of large companies to negotiate discounts on distribution and absorb the costs of shipping.

 

A balanced economy is one thing, but the notion that the Island can support a significant high tech industry sector is to my mind something close to being a pipe dream.

[ourtess]

I own a scientific instrument design and manufacturing company based in Cumbria. We sell worldwide just those sort of low volume high price items Albert mentions. We employ new graduates, train them, and by the time they are 28 they are some of the best in the world in my specialist field. I have recently bought a house in Peel with a view to possibly moving over the business if the authorities on the Island allow.

 

I would prefer to live on the Isle of Man even without any tax advantages. The way of life suits me.

[simon]

But if you're talking about small software outfits - then typically you're talking about tailored solutions. In which case you need to be able to jump in the car and drive to see your clients. Which is why so much of that kind of business is based within spitting distance of the M25.

 

It's the big software companies staffed by the young graduates who export the boxed disc and download solutions.

[Max Power]

Taxation aside, the Island is also known for it's high overheads, property costs and lack of suitable premises, inflexible planning and local authorities, high salaries and as previously stated high transportation costs!

[VinnieK]

I have recently bought a house in Peel with a view to possibly moving over the business if the authorities on the Island allow.

 

I would prefer to live on the Isle of Man even without any tax advantages. The way of life suits me.

 

I hope it works out for you, but you say yourself that your decision to move is for personal reasons, not as part of your business strategy. It's possible that some companies will be able to set up on the Island, but in my opinion it'll only ever be a small part of the Manx economy, too small to constitute part of a balanced economy.

 

How many people does your firm employ? It'll be interesting to see how recruitment is affected by the move. I know that I would think twice about moving back to the Isle of Man for such a specialised career simply because when it came time to move on or change careers it would be an extra hassle moving back to the UK from the Island (as opposed to moving to a different city or town from within the Isle of Man), never mind any other factors.

[Albert Tatlock]

But if you're talking about small software outfits - then typically you're talking about tailored solutions. In which case you need to be able to jump in the car and drive to see your clients. Which is why so much of that kind of business is based within spitting distance of the M25.

 

It's the big software companies staffed by the young graduates who export the boxed disc and download solutions.

What's this assumption that all of a business needs to be located under the same roof and all in the same jurisdiction? It's not just the big companies that do software, there are many small companies that specialise in it, employing people all over the world in the knowledge economy. Some are already based here. Sales people and technical representatives operate out of offices all over the world with a base here.

 

The main point of this thread was that we should be taking advantage of Gordon Brown's cock-ups and the economic advantages for diversifying our economy with the aid of all of the publicity the CBI are giving to the business-crippling taxes in the UK. If something's in the business press and all over the TV - all I'm saying is that we should be taking advantage of the opportunity with a targeted marketing campaign.

 

If you put all your eggs in one basket - you normally end up with nothing but a big ommelete. Come any change in the finance sector e.g. new tax efficient economies opening up, and the finance sector may move there. The finance sector can do this, because the bulk of it's labour force are semi skilled administrators that can be easily offshored and recruited abroad (e.g. India). This is more difficult, impractical and undesirable for many UK high-tech and high-value specialist product companies.

 

People won't be arguing about this if in a few years their own kids end up kicking their heels on the island because of some 'unforseen' downturn in the investment sector, and are then forced to move off the island for their livlihood. There has been some increase in manufacturing over the past few years, but IMHO we are still not encouraging enough of the right type of companies to relocate/start here. The problem is that many of the latest manufacturing jobs could just as easily ship out to other jurisdictions lock, stock and barrel, just as easily as they arrived here.

[VinnieK]

No one's arguing for putting all of our eggs in one basket, I'm arguing that stuggling to have a manx high tech industry isn't going to pay off. Just because the UK economy may in some respects discourage certain kinds of business doesn't mean that the Isle of Man can necessarily exploit this weakness to benefit itself, because there's more to the economics of business than the "tax versus profit 101" issue. Were it simply an issue of tax we'd already have those companies over here. Manufacturing either died or fled the UK a while back, but it didn't come to the Island, it went straight to Eastern Europe and Asia, and the reasons it did so still hold true today.

 

What kind of high tech industry are you talking about anyway? The big league software and technology firms aren't very likely to set up shop here, for the reasons mentioned previously, and the market for small high tech industry at the very cutting edge is currently being cornered by the expansion of the UK's university spin off company schemes. Other smaller hi-tech businesses and consultant firms seem to prefer being near where the money and markets are. Are you in fact talking about small scale precision engineering when you mention high tech industry? Software development and true high tech industry requires a fairly significant level of education these days, so a lot of those "kids kicking their heels" are pretty much going to be the same even if we got a big ass company like microsoft or google over.

 

In any case, you mention others basing their arguments on assumption, but your view is also based on a questionable assumption: That what the CBI says is representative of the truth. As long as I can remember the CBI has been churning out these reports every single year. There may be a grain of truth in what they say, but they seem to nearly always overexaggerate their case simply because business would love lower taxes, and they're not going to get them by appearing happy to settle for higher taxes.

[matty]

I'm with AT on this one, quite a bit of the way.

 

Software companies don't so much have a 'physical' product that needs to be 'shipped off', - no carriage costs there really!

 

If the IOM doesn't look to these sorts of 'industries' then I feel we may miss the boat so to speak, the finance sector is in the same league - it could dissapear overnight very easily, we do need to diversify the local economy and look for other opportunities to make a living.

 

Was chatting to a mate recently who I haven't seen for a while, he used to do loads of set-building for local films - he can't get that work any more, because there's loads of Polish immigrants doing the same job for half the price - we've both got nothing against the Poles doing the same work, but I feel they should demand and expect the same level of wages as us 'locals' would normally get - if not this creates a major upset in the balance of the economy and a lowering of wages for all of us.

 

I've heard recent stuff about the up and coming 'space industry' - I hope this might do us some good - there's no reason the local college & business 'school' couldn't start looking in this direction and educating people towards qualifications with this kind of business - maybe a chiance for the IOM to have something a bit different, and lucrative to help us all out?