'Significant' hit on Manx income

The government currently receives about £300m a year

A "significant" portion of the Isle of Man government's income could be lost following a UK Treasury decision to revise a tax sharing agreement.

About £300m is brought in every year through shared revenue from VAT and other indirect taxes with the UK.

But the figure, which represents about 60% of Manx income, could be slashed dramatically under UK plans to revise the arrangement.

Talks to limit the impact are ongoing between the two governments.

Chief Minister Tony Brown confirmed the discussions after briefing members of Tynwald on Wednesday.

"This matter is still under discussion so it is not possible at this stage to say exactly what the impact of this revision will be on the Isle of Man Government's finances, though it will be significant," he said.

UK deficit

Mr Brown said further clarification would be provided at the first scheduled sitting of Tynwald since the summer break, on 20 October.

The Manx government pools its revenue from taxes such as VAT, excise duty and petrol taxes with the UK government.

Every year, it receives millions of pounds back following calculations made under the revenue sharing arrangement.

But the UK government has now signalled its intention to change the arrangement which will mean less income for the island, a Manx government spokesman said.

He added that ministers were nevertheless confident the island could deal with the repercussions

The full implications, along with detailed figures, for the island will be revealed next week.

The UK is wrestling with a growing budget deficit with public borrowing expected to reach £175bn within two years.

Gordon Brown this week announced a £16bn sale of assets as one of his government's measures to tackle the issue.