The ruling of European Court of the First Instance on December the 18th enabled Gibraltar Inc. to breath a collective sigh of relief.
The Chamber congratulates Government on this landmark victory, and in the same breath asks that GOG give some early indications of what the interim Tax structure will be prior to the introduction of the said “across the board” 10% tax in 2010-11, when our tax exempt company status expires. Will it remain at the 2009 levels through to a universal change, or will it reduced in stages to reach the new rate of 10%?
It is extremely important in these turbulent times that Members are able to plan ahead knowing as early as possible the financial constraints they are operating under. The Chamber seeks clarification in this respect.
Knowing as we do that we can set our own tax rates we need to be wary that the new tax system is uniform for all sectors of the business community. The new system needs to be fully transparent. One rate for all Gibraltar based companies be they trading locally or overseas.
For credibility to be maintained we must have a “one tax fits all” policy. If not we run the risk of further proceedings to challenge our system. If our playing field is not level one cannot start to imagine the uncertainty another court case might costs us in delays and confidence in the market place.
So well done GOG, let us now collectively push forward with long over due marketing efforts to promote the benefits of our Jurisdiction, and to this end the Chamber is keen to offer any assistance to the Finance Centre. that may be needed.
The recent ruling by the European Court of Justice in the Gibraltar tax case has put an end to months of damaging uncertainty in the Rock’s financial sector.
The decision favoured Gibraltar and set the stage for a concerted drive to attract new business and consolidate the Rock’s position as a reputable finance centre within the European Union.
The court dismissed the European Commission’s argument that Gibraltar did not have the right to operate a tax system that was separate and different to the one in place in the UK.
Gibraltar’s unique taxation system has enabled the growth of the finance sector as a key driver in the economy, one that stimulates other areas of business and generates thousands of jobs and vital revenue.
Had the court ruled in favour of the European Commission, Gibraltar would have been forced to implement the UK’s company tax system and rates, which are sharply higher. That would have prompted most if not all of the finance centre and gambling companies to leave Gibraltar in search of more favourable jurisdictions.
In turn, that would have
resulted in thousands of job losses and a huge fall in government revenue, with a knock-on impact on public sector investment and employment.
In short, it would have plunged Gibraltar into crisis.
“This would have represented a massive political, economic and social blow for Gibraltar,” said Chief Minister Peter Caruana.
The Rock’s unique tax system “has been at the very core of our ability as a people, during the last 50 years, to create a successful economy that in turn has enabled us to prosper socially and, most importantly, politically in the face of external challenges to our political rights, wishes and aspirations as a people,” he said.
“Failure to win would have very severely undermined and disrupted all of these things.”
The implications of the European Commission’s challenge, had it succeeded, ranked “up there” with the recent threat to our sovereignty and political rights as a people.
“We are [now] able to remain masters of our own destiny and architects and builders of our own economic, social and political prospects,” Mr Caruana added.
The ECJ’s ruling was widely welcomed by politicians from across Gibraltar’s political spectrum and by finance
The decision came after months of uncertainty about Gibraltar’s future corporate taxation regime after 2010.
Without a clear picture of what to expect after that date, many companies and investors were wary of using the Rock to structure their businesses.
The GSLP/Liberal opposition it was vital now for the Gibraltar Government to move ahead swiftly with the implementation of a new corporate tax regime. “Winning this case was long overdue, as is the work the government now needs to do to provide the new corporate tax system the industry requires and which should have been ready already,” said the Opposition’s finance spokesman Fabian Picardo when the ruling was announced last month.
He added: “Winning this case is important, but the hard work of getting a new, efficient and advantageous tax system in place has not yet been completed.”
The Gibraltar Government will now move ahead with a new system that will implement a flat corporate tax rate of 10%.
The exact timescale for implementation has not been revealed yet but the details of the taxation framework will likely be finalised and published during the course of this year.
Companies currently enjoying tax-exempt status will want that to continue until that system – which was ruled incompatible with EU state aid law – is phased out in 2010. Other companies- including many local ones – currently paying 27% corporate tax will want the new 10% system phased in as soon as possible.
In the wake of the ECJ ruling, executives in the finance centre were bullish about Gibraltar’s future prospects in this sector.
“Notwithstanding the uncertainties over the last few years, Gibraltar’s financial services sector has continued to grow and develop,” said Emilio Gomez, chairman of the Finance Centre Council.
“This is indicative of the other non-tax benefits that Gibraltar has to offer, including our robust regulatory regime.”
“We now have the opportunity to take our growth and development to a higher level by the introduction, as soon as possible, of the corporate tax reforms proposed by the government.”
Back in August last year, as financial institutions around the world took stock of a crisis that had plunged the sector into uncharted depths, a leading Gibraltar banker issued a stark warning.
In an interview with local reporters, Franco Cassar, head of Barclays in Gibraltar, urged consumers to tighten the reins on their spending.
With banks cutting back their lending criteria and the cost of borrowing edging up, this was a time for conservative attitudes.
“In the current climate, without wanting to panic or scare anybody, I think people need to be a bit more careful about how they spend their money,” he said at the time.
Mr Cassar struck the note of caution not just in respect of personal spending, but also as regards the public purse.
The Barclays chief acknowledged that major publicly-funded infrastructure projects and investments had a role to play in stimulating economic activity in times of hardship.
The new airport project, he said by way of example, was an important investment for the Rock because good communications were vital for other areas of the economy.
But he added that the need to be wary on spending applied to the government as well as the man on the street.
“I think the government is right in spending on some public sector projects, but I’m sure there are some that are less important than others,” he said.
“I think there generally needs to be an awareness that we need to be a bit more cautious about how we spend money.”
It is still too soon to assess the impact of the global credit crunch on business in Gibraltar, but the sense among business and political leaders so far is that the Rock is well-placed to withstand the crisis, and perhaps even benefit from it.
Chief Minister Peter Caruana, in his New Year message to Gibraltar, appeared bullish about Gibraltar’s prospects, an assessment helped by the decisive victory in the court case against the European Commission over the Rock’s corporate taxation policy, a factor that underpins the local economy.
“We are very well placed to ride out the storm, and indeed emerge even stronger at the other end of it,” he said.
“Our economy and public finances are strong and robust, the largest parts of our economic activities are stable and on a secure footing.”
“The Government will therefore continue with its scheduled programme of public infrastructure investment, which will provide a welcome stimulus to the economy at a time when the private sector is going through challenging times.”
In recent months, the Gibraltar Government has awarded foreign – mostly Spanish – companies a number of major public-infrastructure contracts worth around E200m.
That has prompted some concern that the knock-on benefits to local businesses of public spending on major infrastructure schemes may not be as significant as in other economies.
Critics point out that foreign construction companies working in Gibraltar often tend to employ outside workers, for example.
Likewise the larger construction companies often impose restrictive credit terms when securing supplies, making it difficult for smaller local companies to compete.
How this will unfold over the coming months remains to be seen, but the Government is adamant that the strategy is one that will pay off for Gibraltar as a whole.
In colourful language, the Chief Minister summed up his assessment of the situation: “These are all projects which take Gibraltar’s socio economic development to new levels and thus ensure our standard of living and quality of life for generations to come.”
“Successful government,” he said, “is about vision for the future, and not about freezing like a scared rabbit in the headlights of today’s temporary news.”
According to Mr Caruana, Gibraltar’s economy will be able to absorb any disruption that may occur to jobs and employment prospects, in particular with companies that may be affected by the global economic downturn.
But he said the Government would in any event remain vigilant and ready to intervene “as necessary and appropriate” to minimise the effect of global recession on job security and availability.
Some steps have already been taken, for example the introduction of measures to guarantee a minimum rate of interest on savings by pensioners and others, however far interest rates may fall in the coming months.
On the other side of the political fence, the GSLP/Liberal Opposition is also confident that Gibraltar will ride out the impact of the global economic downturn.
It is not so positive, however, about some of the Government’s planned projects, in particular the airport terminal.
“In opposition the GSD criticised borrowing for public investment, [claiming that] everything we built was going to be a white elephant and the debt a millstone for future generations,” said Opposition leader Joe Bossano.
“Now, borrowing £80 million to build an air terminal is not a white elephant or a millstone [and] instead, they tell you, it ensures the standard of living of future generations.”
He added: “They have borrowed much more than we did and we have not questioned the amount of borrowing, though we seriously question the way the money is being used.”
Businessman, diplomat, socialist and very personable to boot. Sol Seruya in his eighties remains a shining example of the best in the Gibraltarian tradition.
Who else could win one of Spain’s highest accolades – last year adding the Gran Cruz de la Orden del Merito Civil to his O.B.E. – without stirring the slightest local controversy?
The reason is simple, Sol has stuck to his guns for decades.
He stood for dialogue with Spain when we lived in a world of Cold War and Franco was in power. And he remains convinced of this day when it is the adopted policy of Britain, Spain and Gibraltar.
Yet Sol has never been one to argue for any deal against the interests or wishes of Gibraltarians. Quite the contrary. But he values, above all, liberal to left politics and the democratic process. Controversy is just not his style.
It is very much in his blood.
The Seruya family were originally Jews expelled from Spain under Torquemada persecution in 1492 when they moved to North Africa. Then, 265 years ago, after the British had settled on the Rock in 1704, the family came here to enjoy the relative freedom they were allowed.
“We were grateful to British administration for freedom to practice our religion,” says Sol. He treasures the fact that “Gibraltar is a model to the world as far as inter faith relations are concerned.”
At a time when few Gibraltarians got to university he got himself an MA in Economics and Modern History at St. Andrews University and then a BA in Spanish at London University followed by further studies at Madrid.
At the age of seventy he embarked on annual seminars at the Escorial feeding an insatiable appetite for politics and art.
Sol did not just give opinions. True to his convictions he entered local politics in 1956 and was one of the Rock’s most dynamic Tourism Ministers. He remains very proud of both the theatre facilities at St. Michael’s Cave, the Alameda Open Air Theatre and the promotion of Gibraltar in Britain under his guidance.
His good work for the United Israel Appeal in the early seventies and his role as vice-president of the Sephardic Council in Jerusalem was followed in 1976 by his shining hour as Ambassador of Israel
to the Philippines. Though he has never revealed what shoes she was wearing, Sol famously danced with the notorious first lady Imelda Marcos at a formal engagement which prompted protests from Arab ambassadors!
A radical change in the political climate in Israel saw him lose out on dream job No2 – an ambassadorship to Madrid.
Back home in Gibraltar Sol remained the businessman he had been since his first day behind the counter aged 7. This time he entered the community as a very dynamic Chamber of Commerce president alongside vice president Luis Andlaw.
Again Sol managed to say what he thought without overly upsetting anyone but getting the issues of the day on the agenda. Business, he often says, is Gibraltar’s lifeblood. He also sustained his arguments for the ten point plan he had put forward in the 1950s for co-operation with Spain and projects like shared use of the airport. Again always running a charm offensive in parallel to setting off debate.
When last December 2008 –on behalf of King Juan Carlos – Miguel Angel Moratinos personally presented Sol with the Gran Cruz de la Orden del Merito Civil it was a very intimate occasion.
Sr. Moratinos gave up an hour of his time to chat with Sol and friends amongst which was former Foreign Minister Marcelino Oreja who joined the lunch at the Ritz and paid tribute to Sol and his late wife Frances.
Sr. Moratinos recognised Sol’s efforts for understanding both in relation to Gibraltar and the Sephardic community as a whole.
“Through all these years I have wanted to serve my community in Gibraltar and at the same time from the start, try to find a human relationship and dialogue with Spain,” Sol said in reply. He also dedicated the award to Frances – his own personal lifetime ambassador. At eighty-two Sol remains a close follower of business and politics but above all an optimist. Sol is a great Gibraltarian citizen.
The Chamber of Commerce has appointed Dr. John Fletcher and his team from Bournemouth University, to carry out a major study to examine the economic linkages that exist between Gibraltar and the Spanish hinterland, with particular emphasis on the Campo area. The idea of doing such a study has been mooted for many years now. The Chamber has once again taken the initiative by promoting the project.
Dr. Fletcher is well known in Gibraltar and, more importantly, knows Gibraltar very well, having served as a consultant since 1978 to all Gibraltar governments, including the Hassan, Bossano and Caruana administrations. The consultancy service has been almost exclusively involved in the construction of Input-Output models of the Gibraltar economy. We are very lucky indeed to have Dr. Fletcher on board for this study as he is one of the leading exponents worldwide on Input-Output methodology, having carried out studies all over the world over the last thirty years. We are therefore assured of a thorough, professional and accurate piece of work.
What is Input -Output Economics?
Very simply, it is one of those rare beasts, an economic model that really works! It basically measures linkages within an economy and the links between that economy and the rest of the world. Let’s say a tourist spends £100 in Gibraltar at a restaurant. This £100 will go to pay staff, purchase of foodstuffs, wines and spirits, the restaurateur’s and the like. In turn, staff will spend this money, the foodstuffs supplier will pay for his imports, as will the wines and spirits merchant. Thus, the initial £100 does more than one ‘round’ in the economy. This is what economists call the multiplier effect. Once all the data is taken, and multipliers worked out, the model can be used to determine what the economic impact will be of any change in tourist expenditure or in finance centre activity or, indeed, of any changes in any of the export earning elements of the economy.
Purpose of the Study
Gibraltar Inc. is often portrayed in the media as being some sort of pariah on the Spanish economy, somehow being conceived as sucking money out of our neighbours. We are all familiar with the frequent allegations to this effect made by Spanish politicians, whenever they are on this particular ‘high horse’.
The facts are that the opposite is the reality and that Gibraltar makes a very positive contribution to the Spanish economy. This contribution includes employment, purchase of raw materials, asset investment (real estate purchases), services (logistics, transport, and tourist coaches etc.), Gibraltar residents’ leisure and retail expenditure in Spain and the like. This is a significant level of economic activity that would simply not exist without Gibraltar.
The study will serve to de-bunk the myth about Gibraltar’s economy being a pariah and will quantify the very positive impact the Rock’s economic activity has on the hinterland. It will also show how the economies of Gibraltar and the Campo are intrinsically linked and interdependent, in that any economic changes on one side of the border will have an impact on the other. Apart from presenting Gibraltar in a realistic and positive light, which is good PR, the study should also help towards a more integrated approach to developments on both sides of the border, which is to everyone’s benefit. In the current climate, this is no bad thing.
December 11th 2008 saw the successful launch of Young Enterprise in Gibraltar at the Government Finance Office. The four Young Enterprise companies trading at the College, the Link Teachers, Business Advisors, representatives from the Government and business community attended the reception which was officially opened by Minister Clive Beltran.
Each of the four companies had an exhibition stand displaying their products and services. Pure selling Top of the Rock Achievement Certificates, Class selling handmade jewelry, Goods r Us selling scarves and offering a tuck shop service at the College selling goods from their own kiosk and Plan It the recycling company. Franco Cassar, Director of Barclays Wealth said he could feel the ‘buzz’ from the Students when he walked in the room. The Students spent the evening discussing their businesses and promoting their products and services to the visitors at their stands. Stephen Reyes, Partner at Deloitte and an Advisor for Pure said the Young Enterprise Company Programme was “Great entrepreneurial training”.
The active involvement of Volunteers from the business community is vital to the success of the programme. Not only do the Advisors give their support to the Students, but also valuable time. They are able to offer the Students the benefit of their experiences, enabling the Students to make sound business decisions. Danny Gabay, MD of Redwood International Transport and Advisor to Plan IT said he was impressed with the way the Students had taken the Young Enterprise Company Programme on board and as an Advisor it was rewarding when the Students listened to the advice they gave.
There has been an overwhelming reaction from the business community and each of the four companies has a number of enthusiastic Advisors. Alfredo Vasquez from Vasquez Consulting, an Advisor for Goods R Us, said the Young Enterprise programme was a very positive learning experience for the young adults involved and the big success was that so many businesses have pitched in to make it what it is.
Denis Lafferty, Group MD at Seccone and Speed and Advisor to Class said “Some weeks ago the Students were unaware of what the business world was all about. After 4 or 5 board meetings they were running and being responsible for a business, generating profit. Mr Lafferty said the Young Enterprise Company Programme was all about looking, listening and learning”.
The four companies are now competing against one another to win a place at the regional finals in the UK in June 2009. The successful company from Gibraltar will then compete against other successful companies from the Yorkshire and Humber area. Mike Egar, Chief Executive of Young Enterprise Yorkshire Humber & Gibraltar said at the launch event “there was already a sense of competition not only between the Students but between the Advisors”.
In August 2007 Barclays Wealth provided the generous initial funding that allowed Young Enterprise to be introduced to the Schools and College in Gibraltar. Mr James Gaggero has kindly made a contribution to Young Enterprise from the Gaggero Foundation ensuring the continued success of the programmes in Gibraltar.
Members of the Gibraltar Insurance Institute met at the O’Callaghan Eliott Hotel for the second in a series of business briefings organised by the GII.
The keynote speaker was Mike Oliver, new Head of Insurance Supervision at the FSC who was appointed to his post at the end of August 2008.
“The enthusiasm that the Gibraltar insurance industry has shown to the establishment of the Gibraltar Insurance Institute is remarkable. It is also pleasing that the large membership covers all aspects of our industry; insurers, intermediaries, managers and regulators.”
“In many respects the interests of all four parties to our industry are firmly aligned. We all expect the market to operate in a sound and prudent manner with customers being treated fairly. By supporting its members in developing their technical and managerial skills the Gibraltar insurance industry can only go from strength to strength.” Commented Mike Oliver.
Andy Baker President of the GII went on to say: “These lunches are a key opportunity for our members to meet their colleagues from across the industry, and at the same time receive updates and information on industry issues and trends. To attract nearly half the membership for a lunch at such a busy time of the insurance year, shows how important these events are becoming”
For more information on becoming a member of the GII, or details of it’s training programmes or social events, please contact Andy Baker 200 44295 or email; firstname.lastname@example.org
The Gibraltar Insurance Institute was set up in September 2008 to promote higher standard of competence and integrity in the practice of insurance in the Gibraltar market through the training, monitoring and facilitation of continual professional development for its members. The GII has 117 members to date and has launched a programme of training, social and business events for 2009 and onwards.
At the end of last year the Chamber held a Dinner at The Gala Casino to celebrate the 125th anniversary of the founding of the Gibraltar Chamber of Commerce. Turn out was impressive to hear the Governor speak. The Top table included a number of past Presidents including Sol Seruya, Ian Prescott, Joe Holliday, Tony Welsh and Jimmy Rissso.
The Jewish calendar is primarily lunar based: the Passover and other religious festivals are governed by lunar phases. There are, however, a small number of solar cycles within the Jewish calendar which ensure that the lunar cycles are properly balanced to enable the accurate calculation of a solar year. Among these balancing cycles there is one, which relates to the tilt of the earth realigning every 28 years, so that at the end of the cycle sunrise occurs on a Wednesday in early April at the same precise latitude. The end of this 28-year cycle, which is celebrated with a prayer known in Hebrew as “Birkat Hahama” (The Blessing of the sun).
Jewish history, as related in the Bible, stretches back nearly 6000 years. In this time there have been more than two hundred of these solar cycles but there have only been two occasions when the 28-year cycle coincides with the eve of Passover. Both of these occasions have had a special significance because they occurred in the year of the two great deliverances of the Jewish people and the events are recorded in the Bible. The first of these is better known as the Exodus.
The story of Exodus, as related in the Bible, is an account of the escape from Egypt of the Jewish people. Exodus is also the story of Moses, a man of God, who came to lead the Jewish people to freedom.
The Bible recounts how the children of the Jews were slaughtered by Pharaoh’s soldiers to defeat a prophecy which foretold the birth of a great leader. The infant Moses escaped the Pharaoh’s assassins. He floated down the Nile in a reed cot. The cot was found by the daughter of the Pharaoh who took pity on the boy and raised him as her own. In time Moses became the leader of the Jewish people. He sought in vain to obtain the Pharaoh’s consent to the release of the Jewish people from slavery and captivity. Exodus relates how the Pharaoh was eventually humbled when confronted by a succession of plagues all of which were prophesied by Moses and were intended as a punishment from God.
The plagues started with all the fresh water turning to blood. This was followed by an invasion of frogs. One by one the plagues unfolded as Moses had warned until the tenth plague, which was the death of all Egyptian first-born males. Not until the night of the fulfilment of the prophecy did the Pharaoh, in fear of his own life, finally succumb and grant the Jews their freedom.
The Jews left Egypt only to be pursued a short while later by the Pharaoh’s army. The Bible tells of the Jews reaching the shores of the Red Sea, cornered and defenceless with the Pharoah’s mighty army close on their heels. Moses appealed to God and the sea parted allowing the Jews to walk across to safety. The Egyptian army, which followed in their wake, was destroyed as the seas closed over them.
The second deliverance, which also occurred in a year when the solar cycle ended on the eve of Passover, was Purim. This took place about almost 800 hundred years after the Exodus, approximately 500 BC.
Purim is the story of Esther, a beautiful Jewish woman who was taken to Ahasuerus, King of Persia, to form part of a parade of maidens from which he would choose his queen. Esther was the one chosen. Her Jewish identity however was kept secret. Esther became established in the Persian court but all around her was intrigue and a growing sense of menace which threatened the King’s Jewish subjects. Ahasuerus had allowed his principal adviser Haman free rein with the running of the kingdom. Haman planned to exterminate the Jewish people, but on the eve of their destruction Queen Esther managed to turn the tables on Haman by appealing directly to King Ahasuerus. Her action exposed her to great risk and her bravery is celebrated in Purim.
The current 28-year solar cycle of Birkat Hahama will end on the 8th April 2009, which also coincides with the eve of Passover. This therefore presages what may be a momentous year for the Jewish people. We will have to wait and see, but eventful or otherwise Gibraltar will proudly celebrate both the astonishing wealth of history incorporated in the Jewish tradition and the enduring and harmonious coexistence between Jews, Christians, Muslims and Hindus alike.