Friday, 2 April 2010

When Politics and Business do not Mix

It is one of the duties and obligations of politicians in government to create the right environment for business to succeed, to create employment and wealth.  It is in the interest of governments to do this, not least, because by doing so they can increase their tax revenues and distribute wealth by introducing appropriate social and health systems to look after those who are less fortunate.  It is not right for governments to promote and encourage and subsidise business ventures for purely political reasons.  There are two prime examples where the GSD Government has done so and both seem to be in difficulty.  The first is flights to Madrid.  The second is the ferry to and from Algeciras.

These ventures owe their existence to outcomes of the Trilateral Process.  They do not owe their lives to hard nosed business decisions.  What value is there in once daily flights to Madrid when there are regular services from Malaga, Jerez and Seville, all within 90 minutes drive from Gibraltar?  What business sense is there in the ferry service to and from Algeciras when many now have cars and, if they do not, there are regular buses or availability of taxis?  was it just nostalgia because in the early 1960's such a service existed?

Undoubtedly there was a need to have a new Air Terminal but did we need such a large one at such great expense?  Is the connection to Spain a business or political decision?  If there are no flights to Spanish destinations, what is the point?  The expense of building a new road and tunnel to cross the airport was right and a necessary expense, but the rest, time will tell.  The added issue is the cost of maintaining such a large Air Terminal.  If revenue from the operation of the Air Terminal does not increase by increased use, that added cost will fall on taxpayers.

One commentator asked that the issue of tax advantages to non-Gibraltarians be raised here.  In this regard it is right and the duty of government to create the correct legal environment to stimulate the increased use of Gibraltar for these purposes.  Gibraltar's economy (and so its wealth and ability to help the less able and fortunate) is dependent on very few sectors, these include the port, tourism, retail and export trade and importantly the finance centre.  The finance centre produces about a third of Gibraltar's wealth.  It provides employment directly and indirectly.  It stimulates the building trade (which should not be and is not to the detriment of but helps to finance the construction of social and local housing). The fiscal advantages given to non-Gibraltarians are not at the expense of any taxpayer.  In fact the encouragement of this sector allows the Government to continue its policy of reducing taxes for all in Gibraltar.

It is difficult to see why a need will arise to replace the revenue lost by changing the beneficial tax  system that stimulates the finance centre.  Gibraltar should continue to promote the finance centre with appropriate legislation and seek to improve this offering.


  1. Your first three paragraphs make a weighty case against this government's economic and investment policy.

    Your last two sounds too much like government propaganda.

    Are these huge public investment projects profitable? Where are the business plans?

    Is it profitable to give huge tax concessions to foreigners? What are the figures since 1988?

    Gibraltar plc or Gibraltar "ait" (as it comes)?

  2. Dear Llanito World

    Are you going to write an articule on Judicial conduct and the judicial code of conduct for Gibraltar?

  3. This blog is not and was never intended to be more than just a commentary and not to attack the GSD government for the sake of doing so. Comments are made for and against all political parties depending on their stance on any issue.

    The last two paragraphs cannot be Government propaganda as they reflect the policy of all existing and past political parties since the mid-sixties. Additionally it is not propaganda at all it is a reality and you do not suggest an alternative source of wealth for Gibraltar. The growth in the finance sector and in employment in the finance centre, the attraction of the gaming industry by tax breaks and the employment created in it and the attraction of wealthy individuals to reside in Gibraltar, are all testament of the success of Gibraltar's fiscal policies. The ability to reduce taxes for locals is in a substantial part due to this success.

    The ideal situation would be undoubtedly that all tax laws should be equal. This should be the aim but in the meantime we should not throw the wherewithal by which this might be achieved out of the window for purely dogmatic left wing political theories. Hard facts to show how the wealth created can be replaced are needed to support any change in this policy. Do you have any suggestions?

  4. A Judicial Code of Conduct has been prepared by the Judicial Services Commission.

    There is one provision that requires substantial debate and consideration. The code permits those who have held judicial office to return to private practice in the law in Gibraltar after a 1 year period. In England and Wales the Judicial Code of Conduct discourages this.

    The English rule may be more suitable, especially due to the size of Gibraltar but there are other arguments against this view, for example the added difficulty of attracting local lawyers to take up judicial offices if the rule were to be as in England and Wales.

    The question that is still at large is what system will be applied to enforce the conduct. Will it rely on people telling tales? In which case Gibraltar being what it is nothing will happen.

  5. Fred:

    Your last comment cannot be published because in one sentence you mention one person and allude to another. This may be defamatory and the risk connected to publication cannot be taken.

    Your comment on the judiciary is noted and has been acted upon. The truth is that the comment was taken as generic and not a reference to anything specific, hence why it was published. It has been removed in case it refers to anything specific, which is not at all clear to me.

    If you resubmit your comment with minor redactions it will be published.

  6. Gibraltar needs to be rebuilt: politically, democratically, economically, socially and its ruinous land development corrected.

    That is how alternative and sustainable sources of wealth are created. For all the Gibraltarians.

    This GSD monopoly game has to be stopped.

  7. Whilst I can see enormous room for progress for Gibraltar in the realms of politics, democracy and society I do not see what can change economically or in its land development. Certainly I do not understand how any of this creates alternative sources of wealth.

    It is all very well to use these words but without explanation that is what they remain words. Do you want to expand on your wealth creation ideas?

  8. I fear they will be copied, badly implemented and wasted at this moment. I will share them freely with a totally new politcal force if it ever emerges and if the Gibraltarians come first as their paramount political commitment [MARCUS].

  9. Anon

    You say you will only share your wealth-creation ideas with a new political force, if it ever emerges. Do you not consider the PDP to be a new political force?