Tax caps research

Summary

The requester asked the Isle of Man Treasury for research supporting the economic, social, and environmental benefits of income tax caps for the ultra-wealthy. The Treasury responded that some information was sent, but parts of the request were exempt from disclosure.

Key Facts

• The request was received by the Treasury on 2018-06-07.
• The outcome was determined on 2018-06-25 as 'Some information sent but part exempt'.
• The request specifically targeted research regarding 60-70 individuals earning over £2.5 million annually.
• The requester cited external studies from the IMF, Levy Institute, and Tax Justice Network suggesting low taxation on the wealthy is harmful.
• The response document consists of 4 pages and 1 document.

Data Disclosed

• 2018-06-07
• 2018-06-25
• £2.5 million
• 60-70 individuals
• £500,000
• £30 million
• £10 million
• October 2011
• 4 pages
• 1 document

Original Request

Please could you provide details of any research into the economic, social and environmental impacts of capping income tax payments from the ultra wealthy in the Isle of Man. 1. Economic Is there any evidence that the 60-70 individuals who earn more than £2.5 million/year on average are each putting £500,000 directly into the economy through their own personal expenses (ie. not including business expenses, paying salaries to their employees, etc)? 2. Social Is there any evidence that society receives more benefit as a whole from 60-70 private individuals controlling the distribution of £30 million per year instead of government being in charge of its allocation (for example, by using £10 million to provide free public transport)? 3. Environmental Is there any evidence that the Island's environment benefits from allowing the ultra wealthy to pay a lower effective tax rate than the rest of the population? Has there been any impact assessment into the effect on the Island's greenhouse gas emissions? Additional Information As the Act only extends to information created on or after October 2011 I cannot expect you to provide me with information from before that date. Although if that information exists and easy to find then I would obviously be delighted to see it. Regarding types of information, I'm hoping to see any government-sponsored research or independent research used by the government which supports the use of tax caps and low taxation on the ultra wealthy (1) as a means of promoting economic growth, (2) as a means of reducing our greenhouse gas emissions and/or otherwise improving the local environment, and (3) as a means of providing the best social benefit to the whole Manx population. For example, a quick google search brought up the following 3 studies, all of which suggest that policies of low taxation on the wealthy are actually harmful to growth and the wider society: http://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Causes-and-Consequences-of-Income-Inequality-A-Global-Perspective-42986 http://www.levyinstitute.org/pubs/pn_15_4.pdf https://www.taxjustice.net/wp-content/uploads/2014/04/Price_of_Offshore_Revisited_120722.pdf The above research was all carried out since 2011. In the light of this new evidence has the government commissioned any rebuttal studies, or is there already sufficient evidence that low taxation on the wealthy is benefiting the whole Manx population, environment and economy? There is also growing evidence that tax havens are contributing to climate change through loss of money to governments: https://www.foei.org/press/energy-revolution-possible-tax-havens-financing-climate-action and of course rich people cause more greenhouse gas emissions: https://ourworld.unu.edu/en/the-worlds-richest-people-also-emit-the-most-carbon Any research you can provide to counter the above examples would be very useful.

Data Tables (1)

Full Response Text

Freedom of Information Seyrsnys Fysseree

The Treasury Government Office, Douglas Isle of Man, IM1 3PU

Telephone: (01624) 685605 Email: FOI.Treasury@gov.im

Government Website: www.gov.im

Our ref: 498733 25 June 2018

Dear ###

We write further to your request which was received on 7 June 2018 and which states:

"Please could you provide details of any research into the economic, social and environmental impacts of capping income tax payments from the ultra wealthy in the Isle of Man. 1. Economic Is there any evidence that the 60-70 individuals who earn more than £2.5 million/year on average are each putting £500,000 directly into the economy through their own personal expenses (ie. not including business expenses, paying salaries to their employees, etc)? 2. Social Is there any evidence that society receives more benefit as a whole from 60-70 private individuals controlling the distribution of £30 million per year instead of government being in charge of its allocation (for example, by using £10 million to provide free public transport)? 3. Environmental Is there any evidence that the Island's environment benefits from allowing the ultra wealthy to pay a lower effective tax rate than the rest of the population? Has there been any impact assessment into the effect on the Island's greenhouse gas emissions? You further clarified that: As the Act only extends to information created on or after October 2011 I cannot expect you to provide me with information from before that date. Although if that information exists and easy to find then I would obviously be delighted to see it.

Regarding types of information, I'm hoping to see any government-sponsored research or independent research used by the government which supports the use of tax caps and low taxation on the ultra wealthy (1) as a means of promoting economic growth, (2) as a means of reducing our greenhouse gas emissions and/or otherwise improving the local environment, and (3) as a means of providing the best social benefit to the whole Manx population. For example, a quick google search brought up the following 3 studies, all of which suggest that policies of low taxation on the wealthy are actually harmful to growth and the wider society: http://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/Causes- and-Consequences-of-Income-Inequality-A-Global-Perspective-42986 http://www.levyinstitute.org/pubs/pn_15_4.pdf https://www.taxjustice.net/wp- content/uploads/2014/04/Price_of_Offshore_Revisited_120722.pdf The above research was all carried out since 2011. In the light of this new evidence has the government commissioned any rebuttal studies, or is there already sufficient evidence that low taxation on the wealthy is benefiting the whole Manx population, environment and economy? There is also growing evidence that tax havens are contributing to climate change through loss of money to governments: https://www.foei.org/press/energy-revolution-possible-tax-havens-financing-climate- action and of course rich people cause more greenhouse gas emissions: https://ourworld.unu.edu/en/the-worlds-richest-people-also-emit-the-most-carbon Any research you can provide to counter the above examples would be very useful."

I am pleased to be able to respond to your request as follows: The Assessor of Income Tax is responsible for the assessment and collection of income tax and National Insurance contributions and has no Isle of Man government- sponsored research or independent research on the Tax Cap policy. Therefore, the only research or analysis available is specific to the data submitted to her under the Income Tax Acts and National Insurance legislation. The following information is based on this data. Since the 2010/11 tax year, the Income Tax Division (ITD) has conducted an annual review of data received to seek to identify Tax Capped individuals which to the best of their knowledge are interconnected with companies that are employing staff resident on the Isle of Man. This data is set out in the table below.

Tax year Number of employees Remuneration Total ITIP Total NI 2010/11 347 Not recorded £3.33m £3.59m 2011/12 376 Not recorded £4.85m £5.56m 2012/13 397 £28.4m £4.36m £4.59m 2013/14 1,447 £61.2m £8.2m £9.6m 2014/15 2,036 £96.35m £13.41m £14.58m 2015/16 2,231 £106.13m £13.04m £15.32m 2016/17 2,493 £120.16m £15.46m £18.88m The research to enable compilation of the data comprises of a manual review of information held both in the ITD’s IT system and management information reports.
Given that this underpinning information constitutes personal data of which the applicant is not the data subject and falls within the definition of “data” in section 1(1) of the Data Protection Act 2002, the disclosure of the information to a member of the public would contravene the first data protection principle, fair and lawful processing, in line with Section 25(2) of the Freedom of Information Act 2015, this is absolutely exempt information and cannot be disclosed. Please quote the reference number 498733 in any future communications.

Your right to request a review

If you are unhappy with this response to your freedom of information request, you may ask us to carry out an internal review of the response, by completing a complaint form and submitting it electronically or by delivery/post.

An electronic version of our complaint form can be found by going to our website at https://services.gov.im/freedom-of-information/Review . If you would like a paper version of our complaint form to be sent to you by post, please contact me and I will be happy to arrange for this. Your review request should explain why you are dissatisfied with this response, and should be made as soon as practicable. We will respond as soon as the review has been concluded.

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Should you have any queries concerning this letter, please do not hesitate to contact me. Further information about freedom of information requests can be found at www.gov.im/foi. I will now close your request as of this date.

Yours sincerely