Common Purse agreement
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The Common Purse agreement, or Coardailys yn Chosporran in Manx, entitles the Isle of Man to a share in the United Kingdom's Customs and Excise revenues in return for being in customs union with the UK and not charging any import duties on goods from the UK, or that have been imported through the UK. As the UK is a member of the European Union, the Isle of Man is effectively in customs union with the entire EU.
The agreement is so called because it effectively sets up a 'common purse' for the receipt of excise duties and revenue, which is then split between both treasuries according to agreed formulas.
There were various agreements dating back to the 1600s, but the latest formalisation of this arrangement was the Customs and Excise Agreement 1979. It is basically a revenue-sharing system, and is the latest agreement builds on the Customs Etc Agreement 1957, which stated that Tynwald could not introduce any differences to UK indirect taxation (except on beer) without the permission of the UK Treasury (in preparation for the UK Parliament empowering Tynwald with control over Manx indirect taxation in the Customs (Isle of Man) Act 1958)
In addition, this means that VAT must be charged on Mann at the same rate as in the UK, and all VAT receipts are paid to the UK Treasury (but then repaid to the Manx Treasury through this agreement), but the agreement is generally accepted as being advantageous to the Isle of Man.
There have been differences in indirect taxation agreed, for example in 2003 UK betting and gaming duty was set at 15%, whilst the Isle of Man brought in a lower rate of 10%.
According to the Isle of Man Treasury, 'Neither the amount actually received, nor the exact method of calculation of the Island's share of the common duties and taxes, is in the public domain'. It is therefore not known how much is received by the Isle of Man from the United Kingdom. Despite this, in a Tynwald debate in December 2005, the Minister for Tourism and Leisure revealed that every visitor to Mann from the UK, even if only on a day visit, was worth £50 to the Isle of Man Treasury in additional Common Purse allowance.[1]
The Isle of Man also has a Common Services Agreement (replacing the earlier Annual Contribution Agreement 1957) with the United Kingdom, whereby payment is made for defence, foreign representation, and other work done by the Departments of the UK Government on behalf of Mann and it's people - excluding NHS health care on the mainland for Manxmen, which is not currently charged to the Manx Government. In 2002 the payment made was £2.4 million, and is a set proportion of Common Purse receipts. However, if defence alone was proportioned according the relative populations, the Manx contribution would be in excess of $29 million, some ten times larger.
The Manx Nationalist party, Mec Vannin want the Manx Government to control indirect taxation, including VAT. They recognise that this would involve the cessation of the Common Purse agreement.
