The island’s tax cap policy for the super-rich is a ‘flawed and expensive policy not supported by the evidence’.

That was the claim made by Ramsey MHK Lawrie Hooper as he attempted to get the policy scrapped.

Tywald rejected the move and instead voted overwhelmingly for the level of the tax cap to be constantly reviewed, and its economic benefits monitored - with a report on the matter to be submitted alongside next year’s Budget.

Mr Hooper told Tynwald: ‘The tax cap - we all know it, but do we really understand it?’

He claimed that the tax cap could be costing the taxpayer £80m a year.

Treasury figures show the tax cap has provided a direct economic benefit to the island of £114m over five years. This includes tax revenue generated from jobs created by wealthy entrepreneurs,

But Mr Hooper said his calculations estimated the amount of tax that should have been paid over that period was £386m - a cost to the taxpayer of £272m, representing a 70% discount on tax due, he said.

‘It’s a very expensive sledgehammer to crack this particular nut,’ he said.

He said he wanted evidence on Treasury claims that the super-rich would leave the island if it wasn’t for the tax cap. He pointed out that the number of ‘taxcappers’ had fallen from a high of 87 to the current total of 61.

‘Are people here because of our tax cap - or are they simply not in the UK because of their tax system?’ he said.

Rob Callister (Onchan) warned Mr Hooper’s motion could have serious consequences for the Isle of Man as it could result in job losses and lead to the delay or even withdrawal of several major infrastructure projects.

Treasury Minister Dr Alex Allinson pointed out that the rate of the tax cap has increased since it was introduced, and it would continue to change.

And he said its removal would not necessarily create additional revenue.

Dr Allinson said Mr Hooper’s £80m a year was a significant over-estimate.

He argued that if the policy was scrapped, high net worth individuals would be incentivised to rearrange their tax affairs or relocate.

Dr Allinson said Mr Hooper’s motion ‘ran the risk of sending out the wrong signal to the international community and people already on our island who appreciate the value of living here and are putting back in terms of their economic activity’.

The Treasury Minister tabled an amendment that the policy be reviewed and its economic impact monitored. This in turn was subject to Speaker Juan Watterson’ amendment that the review should be submitted to Tynwald alongside the Budget pack.

Tynwald voted overwhelmingly to support the Speaker’s amendment.