MercoPress. South Atlantic News Agency

British MoD row over Ascension Islands reached the London press

The outpost is described as “vital to the protection of the Falklands”

The military outpost of Ascension Island “vital to the protection of the Falkland Islands” is at the centre of a row over tax bills unpaid by the Ministry of Defence, according to an article on Sunday’s edition of the Daily Express.

The British newspaper in a piece by Kirsty Buchanan argues that “Ascension Island – home to an RAF base used to patrol the South Atlantic – could be driven into bankruptcy unless the MoD pays £2.7m in tax arrears”.

Foreign Office Minister Chris Bryant has stepped in to try to convince the MoD to pay up. If he fails the Ascension Island Government may have to shut down the island within a few months.

The decision would mean closing the school and hospital and forcing 940 residents to leave their homes. But it would also mean the loss of a strategic military base and a vital listening post for GCHQ, Britain’s electronic intelligence service.

Relations with Argentina, (that has a sovereignty dispute over the Falklands) have deteriorated since it withdrew from a fishing deal designed to protect stocks, banned planes to Chile from over-flying its territory and banned its oil workers from the Islands.

The report, Argentina Defence and Security 2010, warns: “Tension over the Falkands’ is likely to increase over the coming years.”

The tax row dates back to the creation of an administration for the island in 2002 and the introduction of taxes. While other major employers – the BBC and Cable & Wireless – agreed to pay, the RAF, which runs the airport with the US, disputed the fee for its clubhouse and barracks.

An interim payment was agreed to allow the MoD to send its own tax assessors, but that never happened.

Instead the MoD – which faces a £36billion black hole in its own budget – has been making interim payments ever since, leaving the island government £450,000 short every year.

Services have been cut and some staff at the island’s Two Boats School has already been made redundant. The nearest school is on St Helena – three days away by sea.

Acting administrator Alan Cobden said: “If we do not get the funding we need, we may have to give three months notice, switch the lights out and quit the island”.