15th November 2011
My Euro-constituency contains both the South West of England and Gibraltar; today I am dismayed over an European legal ruling that forces the Rock to abandon its competitive tax regime
which has seen it become a burgeoning hub for financial services and internet transactions in recent years.
Gibraltarians have seen growing prosperity, which has bucked the European trend, but this decision by the European Court of Justice to not back people’s freedoms to set tax levels as they please is deeply regrettable.
The decision by the court in Strasbourg is the latest in a saga that began in 2002 when the UK first informed the European Commission that Gibraltar was to introduce a business-tax regime based on payroll and property-use in the overseas territory and which effectively capped corporation tax at 15% of profits.
In 2004 the Commission ruled the tax system must be scrapped as it amounted to unlawful state aid that was incompatible with the common market.
Gibraltar and the UK appealed against the ruling and the Court of First Instance ruled in their favour in 2004. The court said Gibraltar's Government had set the tax in a manner that was institutionally, procedurally and financially independent of the UK - so it was wrong to suggest that the UK was involved in the decision or was involved in any in way in offsetting it. The lower court also ruled that the Commission had not followed proper procedure in declaring the regime illegal.
An appeal against that decision by the Commission led to a new hearing and today's judgment.
I know Gibraltarians well and while they are proudly British and loyal to the Crown, they are also very quick to assert their democratic independence, their right to self-determination and their right to set their own laws and taxes.
Unfortunately the court has not vindicated those rights and has allowed Gibraltar to be victimised by the Commission.