The Chief Minister is to be congratulated for having had the political acumen and maturity to seek, heed and help to improve, with his personal input, on the ideas of those lawyers, accountants and other finance centre operators who have devised a tax system for Gibraltar that is EU compliant but still delivers also to Gibraltar's finance centre one of the tools by which it can continue to succeed. However, it is no longer the same world of pile them high and sell them cheap. Operators in the finance centre will be operating in a more sophisticated environment where cross-disciplinary co-operation, professionalism, knowledge, expertise, specialism, innovative and unique thinking will be required.
Before I develop that theme a little more, let us dwell on some other significant achievements of the new tax laws. Aside from safeguarding the finance centre, the opportunity has been taken, at long last, to improve the system of collection of taxes from business, companies and the self-employed. This was long overdue. The PAYE system has meant that the employed have, for years, paid tax throughout promptly, whilst all others have been paying in a delayed fashion, some even delaying payment far too long. This inequality could not continue and it was not politically sustainable any longer.
In addition, the strengthening of anti-avoidance measures and the imposition of deterrent policies was equally long overdue. The laxity (not to describe it as total disdain) with which certain taxpayers have dealt with their tax affairs in Gibraltar is widely known to the degree of notoriety. Such behaviour is unconscionable. it is a crime against all society. It is with tax revenues that a government functions, provides for the common good, delivers essential services and helps to improve the lot of the less fortunate.
There are those that will squeal and complain. The majority will be the very people that the new tax laws are intended to catch. They have no reason to squeal. They have reason to hang their heads in shame.
If one is to be critical at all it, it is by reason of the lack of discretion given to the Commissioner of Income Tax. There will be good grounds, on occasion, for some to justify a slight delay, not least in the initial stages of the introduction of the new tax system. There is also good reason for the accountancy profession to squeal about this lack of discretion, at least initially, the resources are simply not available to catch everyone up in such a short period of time. There again, that is life, and a superhuman effort will be required.
It is, as the Chief Minister pointed out, on the basis of full compliance, acceleration of payment and improvement of collection of tax, together with added revenue from those that have in the past not paid any tax due to their tax exempt privileges, that further reduction of personal taxes will be achieved. When this occurs, those who have squealed may be pleasantly surprised; not only will they be tax compliant and not be constantly looking over their shoulders but their tax burden will be at a bearable level. In order to achieve this, the tax office will need to be better resourced and also ensure proper training, otherwise the system will simply not operate as intended.
To return to the theme in the opening paragraph. The finance centre will need to adapt quickly to the new regime. It will need to become more sophisticated but, equally importantly, so will those in the public sector on whom reliance will be placed to oil the wheels of the finance centre. The persons in the tax office dealing with sophisticated finance centre financial instruments and structures will need to develop the necessary expertise. Good and quick response times are essential. .
Gibraltar will no longer be competing with the traditional Crown Dependency Tax Havens. It has joined a club in which the competition includes Luxembourg, Malta and Cyprus. All these are very hungry jurisdictions. .
The finance centre may be seen by voters as resourcing the rich and capitalists and so will not be popular amongst them. The message that must be propagated is the true message, which the Chief Minister has himself vocalised already:
"Thousands of local jobs, much Government revenue and thus our public services, depend on Gibraltar having an internationally competitive tax system.... banks, insurance, investment, gaming and other companies ... are vital to our economy and to the social prosperity of all of us in Gibraltar".
In shorthand, the finance centre is vital to all of us, do not think otherwise.