Event Information

The Tax Gap - is it fair?

The important issue of tax fairness will be considered at the next Positive Action Group (PAG) public meeting when the guest speaker will be former IOM Assessor of Income Tax, Mark Solly.

Although most of us dislike paying our taxes there is a general acceptance that they are necessary to provide essential services from which we all benefit.

With VAT receipts reduced it may be that the next government will consider increasing income tax from the existing standard rate of 10% and the higher rate of 20%

"A tax should be seen to be fair in its impact and, broadly speaking, a person’s contribution to tax revenue should be proportionate to their income", according to the Treasury Minister.

Yet her budget decision to abandon the Attribution Regime for Individuals ( ARI) as from April 2012 may mean a reduction in tax take and further develop a two-tier tax structure which she admits was created with the introduction of a tax cap in 2006.

Tax expert, Mr Solly, is concerned that we are moving to a system of income tax which bears more heavily on the least well off in our community and that little attempt has been made to tell the public, in plain language, the likely consequences of the proposed changes. He will explain this at the meeting and call for a coherent national tax strategy to urgently be developed.

Chair of P A G, Roger Tomlinson comments:

"PAG considers this an important Election issue about which voters and all candidates need to be aware. Up until the introduction of the tax cap in 2006 we had a progressive tax system which meant that the more you earned the more tax you paid. The tax cap measure effectively created a two tier tax system. It is a policy which has not been proven to have been successful.

The abolition of the ARI next April may make it possible for wealthy individuals to shelter income in companies and so minimise a tax liability. This in turn could place a further burden on the less well off.

Do we want such a two-tier tax system? It's a fundamental question that the new parliament must consider after the Election. The meeting will, we hope, stimulate debate and we urge voters to come along, hear the argument and make their views known"