Clause 2.—(REMOVAL OF CERTAIN RESTRICTIONS ON DISPOSITION OF PROCEEDS OF CUSTOMS DUTIES.) (Hansard, 29 March 1955)

Mr. Glenvil Hall

I have no desire to hold up proceedings, or to keep the Committee sitting unduly long, particu- 272 larly as there are other important matters to which we desire to proceed, but there are one or two questions which, I think, should be put on this Clause.

The Financial Secretary dealt broadly with what is contained in the Clause and indicated that a formula has been negotiated. I gather that it has now been accepted by the Isle of Man authorities. It would be interesting to the Committee if we could be told, briefly, what that formula is. At the moment, under the 1866 Act the Isle of Man pays us £10,000 a year and, under an agreement come to, I think, in 1949, it agreed to step that amount up, but we were not able to accept the extra money because of the provisions of the 1866 Act. For about four years that money has been put into cold storage.

As I understood the hon. Gentleman when he moved the Second Reading, there is now about £300,000 lying ready for the Imperial Exchequer immediately this Bill is passed. That works out at about £75,000 to £80,000 a year. Can we, therefore, take it that under the formula, we shall be getting at least £100,000 a year for the future, and possibly more?

§ Mr. H. Brooke

I welcome the opportunity to explain to the Committee the working of the formula. First, I must weary the Committee with an explanation of the Common Purse arrangements, because the formula depends on that.

To the best of my knowledge, there are no cases where the Isle of Man Customs duty is higher than the United Kingdom Customs duty, but there are certain instances where it is lower. The Committee will readily understand that on any commodity for which the Isle of Man duty is lower, the importer takes care to see that the article has not borne the United Kingdom duty, or that if it has paid that, drawback has been secured. In those cases, therefore, the duty is paid on importation into the island at the lower rate and the island retains the proceeds of all those duties. But there are other articles on which the duty is identical, and in those cases what are called the Common Purse arrangements operate.

The whole of the duty on those articles, wherever it is collected, whether in the 273 United Kingdom or in the island, is paid into the Imperial Exchequer, and the island is subsequently credited with the amount of duty payable on its estimated consumption of such articles. The estimated consumption is calculated by multiplying the resident population of the island, plus an artificial fiscal equivalent, so called, in respect of visitors, by the average consumption per head in the United Kingdom. That is the Common Purse.

Hitherto, the contribution to the United Kingdom, as the right hon. Member for Colne Valley (Mr. Glenvil Hall) has said, has been £10,000. In 1949, an agreement was reached with the Isle of Man authorities and a Tynwald resolution was passed on the basis of this agreement that for a period of five years beginning 1st April, 1950, the island's contribution, instead of a fixed sum of £10,000, should be an amount equal to 5 per cent. of the Common Purse proceeds. This has had the effect of increasing the contribution from £10,000 to about £90,000 a year; but only £10,000 of that has been payable over to us, because the 1866 Act stipulates £10,000 no less and no more. That is how, since 1st April, 1950, these additional sums have been accumulating. As I explained on Second Reading, at the end of the last financial year the accumulation was in the region of £300,000, and a further sum, which may be about £80,000, will have accumulated at the close of the current financial year, which ends this week.

The purpose of the Clause is to make it possible to pay into the Imperial Exchequer both these additional sums and any future contributions which, subsequently, it may be agreed that the island should make.