It is that time of year again and in regard to the forthcoming budget, the Chamber understands the Government’s dilemma of shaping tax policy in the next few years during the introduction of the new regime for lower corporation tax. That said, the Chamber believes that it would be preferable to err on the side of caution and retain the current 27% rate until the lower 10 per cent rate is introduced in July 2010.
Further action needs to be taken to reduce Government expenditure.
What the Chamber is most concerned with is increases in fixed costs which are not performance-related, i.e. where businesses have to pay, whether their businesses are profitable or not. Increases in fixed costs at this time could be very difficult for many traders to absorb. Introducing such increases in fixed costs in the current climate is likely to lead to job losses thus negating the objective of raising extra revenue for Government.
The Chamber also believes there are other methods of boosting revenue: Further action needs to be taken to reduce Government expenditure, not least the costs of civil service pensions and clamping down on the abuse of sick leave in the public sector. The private sector may have tolerated these excesses in the past but when their own businesses are at risk, many of the membership are losing patience with having to pay for continued poor service and the ever-increasing costs of the public sector. With inflation expected to run at negligible levels and private sector wage settlements following inflation, wage restraint in the Public sector is crucial.
In the latest accounts, the Government Auditor commented on the improvements made by Government in collecting outstanding dues, but the fact remains that substantial sums remain overdue.
The Chamber hopes that the Government will give due consideration to these reasoned proposals in the forthcoming budget, particularly when many local businesses are already feeling the effects of the economic slowdown.
The Chamber warmly welcomes the new carrier Ándalus Air to Gibraltar.
The re-start of the route from Gibraltar to Madrid is a most welcome addition to the existing routes to London and Manchester. Twice daily flights during the week and once at weekends, offers excellent flexibility.
In full knowledge that other carriers had tried, and failed to make the route work, Ándalus Air studied the market carefully, listening to the suggestions of the local business community. As a result we have an early morning departure, as well as an evening return to and from Madrid. By using small fifty seat business jets on the route, it should be sustainable.
Ándalus has already announced a Gibraltar to Barcelona route which will commence on the first of June. This route will have a daily flight, apart from Saturdays. The Managing Director of Ándalus also indicated to the Chamber that Ándalus may well introduce a service to Bilbao in the future.
The Chamber congratulates the airline and the Government for all the hard work in bringing this new service to fruition.
The Organisation for Economic Cooperation and Development [OECD] has its eyes on tax havens, but Gibraltar is confident that it will avoid getting caught in the clampdown.
As the OECD works towards its next progress report on tax matters at the end of the year, countries are being urged to sign information sharing agreements and embrace international standards.
The aim is to close offshore loopholes that allow companies and individuals to shirk paying taxes in their own countries.
Gibraltar has long expressed commitment to those standards, but its first agreement – with the US – was signed on the eve of the recent G20 summit where the international community declared war on tax dodgers.
From now until November, Gibraltar must sign at least 11 more bilateral agreements if it wants to enter to top category of countries regarded by the OECD as those which substantially meet its criteria on tax.
For the Rock, the pressure is even greater.
British Prime Minister has written to all the UK’s offshore tax havens – including Gibraltar – warning them to meet international transparency standards within six months or face sanctions.
In the face of this, the Gibraltar Government expressed confidence that it would meet the target.
“This is an ongoing process,” Chief Minister Peter Caruana said at the time. “We are committed to doing it. I’m very confident that we shall have signed 12 agreements by November.”
At the time of the G20 summit, the OECD published a report which included Gibraltar in a category of countries that had yet to meet international standards on information sharing.
In the report, Gibraltar was listed as a ‘tax haven’ in a section that included 30 other countries or jurisdictions, of which seven had – like Gibraltar – signed one agreement, while 16 countries had yet to sign any at all.
The 12 agreements are a vital step toward getting out of that category and into the so-called white list.
Gibraltar has already opened talks on this with numerous countries in the EU, including Britain and Germany.
Its tight standards and EU status – meaning that key directive on these issues have already been transposed into local law – will stand it in good stead.
Mr Caruana welcomed the prospect of a level playing field on tax matters between jurisdictions competing for international finance business.
He said that ultimately, this would be good news for the Rock’s finance centre.
“We are actually very well positioned to prosper from this welcome raising of global standards of regulation, transparency and exchange of information,” Mr Caruana said in a radio interview at the time.
As for the unwelcome ‘tax haven’ label, even this will disappear in time.
The phase-out of the tax-exempt regime next year would further enhance the Rock’s international reputation as a well-regulated EU onshore finance centre, rather than tax haven.
But there are also clouds on the horizon.
Spain, for example, expressed some concern about the agreement with the US. While it welcomed such cooperation, it bemoaned the absence of the UK in the process.
Likewise news that the Spanish Government has joined the European Commission to appeal the European Court of Justice’s ruling in the Gibraltar tax case has created some unease in business circles.
The Commission is challenging the ruling on a technicality focused on the issue of material selectivity. It is not focusing on regional selectivity – the issue whether Gibraltar can have a different taxation regime to the UK – which could have had potentially drastic implications for Gibraltar’s economy.
But although nothing had been confirmed as this edition went to press, there were speculative media reports that Spain’s challenge might also include regional selectivity grounds.
According to those reports, the Spanish concern is focused mainly on the role – or rather, the absence – of the UK government in devising and administering Gibraltar’s tax form.
Although the final outcome is still up for grabs, the general sense is that this politically-motivated tactic will fail to prosper.
At the official launch of the new air link between Gibraltar and Madrid, Joe Holliday, the Minister for Enterprise, Development, Technology and Transport, summed up the mood: “Third time lucky.”
Both those airlines had launched daily links in the wake of the Cordoba Agreement, but both pulled out because of low passenger yields. Recently released official figures show that, on average, Iberia filled under half the available capacity on each trip.
Ándalus, however, is confident of succeeding where others have so far failed.
The key to the company’s bullish attitude is a completely different business model that targets the needs of both tourists and, crucially, the business traveller.
The company is linking the Spanish capital with two round-trip flights a day, the first leaving Gibraltar early in the morning, the second late in the evening.
That makes it possible for businessmen to complete a day’s work at either end of the route and be home for dinner.
Where Iberia and GB Airways were using large short-haul passenger planes, Ándalus has opted for smaller 50-seat Embraer jets.
“This link is important and will provide a world of opportunity for Gibraltar and the Campo area,” Mr Holliday told reporters at the official launch.
“We all have a role to play to support the project and make sure it work, and it is in Gibraltar’s general interests that it does.”
This is still early days for this project but Gorka Zamarreñoi, the company’s commercial director, said between 60% and 70% of all available seats were being sold on each trip.
At times when demand is low, the company is leasing a smaller jet to avoid empty flights.
Ándalus has further plans for the Rock.The company intends to start flights to Barcelona.
Beyond that, it has plans to establish a twice-weekly link between Gibraltar and Bilbao.
Ándalus is a new company that started operating last year with flights between Málaga and Nador, in Morocco.
It also flies between Seville and Marrakesh, also in Morocco.
The Gibraltar Port Authority has increased its tariffs as part of a wider shake-up that has also seen the introduction of charges on the east side anchorage. The new, increased fee structure reflects the Gibraltar Government’s wish to generate greater financial and economic benefits from maritime activity.
The Government said ships that used the eastside anchorage exposed the Rock and its taxpayers to financial and environmental risk from maritime incidents. For an example, look no further than the Fedra casualty. This should be reflected in the tariff regime it added.
In the long term, the changes on the east side in particular will bring wide benefits to the maritime community at a time when anchorage space is at a premium.
The Gibraltar Government intends to extend the facility for the provision of port services to ships anchored on the eastside anchorage, as is presently the case with the western anchorage, and this will considerably extend the port’s capacity to handle ships.
The change will be implemented once the port’s new Vessel Tracking System is installed. This will allow radar coverage of all Gibraltar’s waters.
“The Government is embarked on a programme of significant investment and change in the port to modernise, extend and improve its facilities, so that it continues to be an important engine of our economy,” said Joe Holliday, the minister responsible for shipping. “International competitiveness is key and uppermost in the Government’s mind. But Gibraltar taxpayers as a whole must get a fair deal in the process. This new tariff regime achieves all of these things.”
When the move was announced, some operators expressed concern that the hike in fees could impact negatively on the port’s competitiveness at a time when the maritime industry had taken a sharp downturn.
Many ports are trimming their charges to make it easier on customers during lean times.
The Port of Algeciras, for example, has frozen all tariffs as a way of helping its clients ride out the impact of the economic crisis and the slowdown in global trade.
The decision was taken by the port authority’s administrative board and is in line with similar measures in place at other state-owned Spanish ports.
Charges on ships, passengers and cargo will be kept at 2008 levels throughout this year. The port has also renewed a discount system for both transit cargoes and vessel dues, as well as transhipment containers.
All around the world, the economic slowdown has hit maritime trade volumes hard, leaving many ship owners trimming costs as they struggle to find cargoes for their vessels.
In the past, the east side anchorage has been used to lay up vessels while owners wait for an upturn.
Now, the tighter controls aim to minimise the risk by ensuring that only vessels calling at Gibraltar for commercial reasons can anchor on the east side while they wait for a slot.
Reacting to the concerns, the Port Advisory Council said the increase in Gibraltar’s increasing port tariffs would not dent the port’s competitiveness.
“The new port tariffs have been the subject of wide and careful consultation over many months by the Gibraltar Port Authority with member of the Council and…unanimously agreed with the level and timing for the introduction of these new tariffs,” they said in a statement at the time.
“We do not believe that these new port tariffs will have any negative effect on business in the port, which will continue to be competitive in the market.”
Jeremy Blatch looks briefly at the series of US bailout plans and discusses what lessons may be learned for the future.
A recent definition of an investment bank goes something like this, on one side of the balance sheet nothing is right and on the other side nothing is left! Or as a friend quipped in a recent meeting ”what investors are seeking now is not a return on their capital, but a return of their capital!” Another friend has a been operating a very profitable waste disposal business for years. To me his business has similarities to that of the US Government. Like the US Government, who has the so called toxic waste of financial assets, my friend also starts with a pile of waste. Like the US Government my friend pays a speculative price for the waste, as he has no idea what it will yield. Unlike the US Government, my friend is neither arrogant nor foolish enough to borrow money from his sons speculating against the future earnings of his grandchildren, to fund his business. You don’t solve a problem of excessive debt with more debt! “Quantitive Easing” printing money , in plain old fashioned English, historically has never worked and will fail now. Current policy will result in a vicious inflationary spiral further down the road!
The Japanese economy went through a period in the 90’s which is still referred to as the “Lost decade”, propping up “zombie banks“and now some 19 years later the Japanese stock market is still 80% lower than at its peak. They have however cleaned up the banks and Japan is once again a competitive nation. The Japanese went into their “ depression“ as a creditor nation, in the early 70’s, the US, once the richest creditor nation on earth, have squandered over a decade what they had produced over centuries, to become now the most heavily indebted nation in the world, and growing, as they continue to print money until they run out of trees, further debasing the US Dollar! When national debt in the US was funded by Americans they bought stable 30 year Treasury Bills. The current debt owned by China, Japan , Asia and Saudi Arabia is mainly in short term volatile 2 year Treasury Bills with negative real interest rates and a devaluing currency!
The thesis of the US bail out plans accepts as its premise that banks are fundamentally sound and well run, and that bankers know what they are doing? The facts tell us otherwise. The fact is that financial leaders bet their banks value and name on the belief that there was no real estate crisis nor bubble, and the view that aggravated levels of debt were not a problem, and would revert to the mean. They were wrong. They lost the bet and no amount of “financial juggling” will bring back the status quo. They displayed the same arrogance and that was the undoing of the first large Hedge Fund, Long Term Capital Management (LTCM) to go under in early 2000.
We know deep down that making huge sums of money is often a matter of luck, good fortune or a degree of connivance, and yet we have bred a culture giving these people a sort of elevated intellectual celebrity status. By and large the very people that were responsible for presiding over the the financial and banking systems that lead us to the mess we are now in, are still directing policy in the US Treasury! Power corrupts and absolute power corrupts absolutely. As Gibbon wrote in, The Decline and fall of the Roman empire, “if I just keep building roads and lowering taxes the people will be happy” in present day jargon “The Greenspan put”. Or in plain English refusing to let insolvent financial businesses fail.
It seems to me no coincidence that the “golden age of spin” in plain English deception, grew with the paper wealth and prosperity during the last decade. It is true that philanthropy and charitable work benefited during this age of prosperity. But at what cost? Plato said ”everything that deceives can be said to enchant” we have had a decade of enchantment and some policymakers are still living the lie of this deception. What a hypocritical example the US and UK governments are showing future generations. Preaching a message of the need to save and produce, whilst borrowing more and printing money as fast as they can. Why wait for something when you can have it now?
Walking around the Dead Sea in Israel recently, whilst it was raining, I thought of how the “toxic saline water” yields absolutely no life at all, in spite of being replenished by fresh water, and wondered how much life will emerge from the ”so called Toxic financial waste” into which the US Treasury is pouring Trillions of USD?
Perhaps you are now needing security and safety for the capital that you have and like many are reappraising in the light of the recent crisis, how to preserve your capital? And perhaps within your own resources you do want somehow to help those less fortunate. The Solidarity Fund allows the investor the opportunity to show solidarity with the weakest in Society whilst gaining access to first class investment management. There is no initial charge to subscribe into the Solidarity Fund.
From 1st May 2009 nationals from the first wave of EU accession states no longer require a work permit to work in Gibraltar.
Nationals from the following countries are free to work in Gibraltar without a work permit:
- Czech Republic
- Slovak Republic
Employers who wish to employ nationals from these countries should register them the ETB in the usual way. ETB telephone number is 200 40408.
Nationals from the second wave of accession states i.e. Romania and Bulgaria wishing to work in Gibraltar will still need to apply for a work permit. The opt-out on nationals from these two countries expires on 31st December 2011.
In late April Gibraltar Customs announced that it had increased the import duty thresholds at the Parcel Post Depot on Smith Dorrien Avenue.
This means that traders will now be able to clear imported goods up to a higher value direct from the Post Office at the Smith Dorrien counter instead of having to go all the way to the Entry Processing Unit (EPU) at the frontier.
Provided that the duty payable on the goods does not exceed £200, (approximately £1,700 value at 12% or £3,300 value at 6%) traders should be able to pick up their goods at Smith Dorrien once the duty is paid.
Smith Dorrien Depot Winter Opening hours
Mon to Thurs 9.00 am – 12.45 pm 2.00 pm – 4.45 pm
Fri 9.00 am – 12.45 pm 2.00 pm – 4.00 pm
Summer Opening hours (from 15th June)
Mon to Fri 8.00 am – 2.30 pm.
easyJet has released details of its Winter schedule from London Gatwick (LGW). With effect from Sunday 25 October 2009 the airline will operate just one daily return flight.
EZY8903 LGW-GIB 0740 – 1130 EZY8904 GIB-LGW 1200 – 1350 Mon-Sat
EZY8903 LGW-GIB 1045 – 1435 EZY8904 GIB-LGW 1510 – 1705 Sun
From 02 November the timings will also change to the following:
EZY8903 LGW-GIB 1000 – 1350 EZY8904 GIB-LGW 1425 – 1620 Mon-Fri
EZY8903 LGW-GIB 0900 – 1250 EZY8904 GIB-LGW 1325 – 1520 Sat
EZY8903 LGW-GIB 1045 – 1435 EZY8904 GIB-LGW 1510 – 1705 Sun
British Airways will continue to operate a single daily flight from London Gatwick with just a slight change to the timings (effective 25 October 2009)
BA2494 LGW-GIB 1335 – 1730 BA2495 GIB-LGW 1815 – 2010
Monarch Airlines has confirmed that it will maintain the current thrice weekly flights from Manchester for the Winter.
The Luton schedule will be reduced to 5 weekly flights from 02 November and then to 4 weekly from 16 November.