This year’s Budget was presented to the Manx people by new Treasury Minister, Alfred Cannan MHK, which was no doubt a difficult task. He announced this budget intending to help the working families and individuals who have had to tighten their belts over the past few years.
It’s great to hear that the taxation allowance will take 3,300 individuals out of the tax net altogether by increasing allowances from £10,500 to £12,500 (and from £21,000 to £25,000 for a jointly assessed couple) which, we are told, is the largest single increase in the Income Tax Personal Allowance in any Budget. On the other hand, maximum tax deductions for interest paid on loans and mortgages have been reduced from £7,500 to £5,000. Whilst it is understood other jurisdictions are removing this relief entirely, I expect it will be felt by many of the working families this budget claims to support.
I am pleased to hear that the Government is continuing to show its support to allow existing Island based businesses to reach their full potential, on top of acknowledging that the Island needs to continue to build our economy still further by encouraging new investment, new business and new jobs from outside.
With this, the Government successfully launched the £50 million Enterprise Development Scheme in June 2016 and the budget tops up the Fund by £2 million to meet the anticipated demand for funds in the coming year. All good news, but there are other considerations to help this work. The Government must make sure the regulatory bodies and banks are on board with the Isle of Man Where You Can slogan in order to achieve the objectives being targeted.
There was good news for businesses as corporation tax has stayed the same at 0% but there have been significant plans made to increase the tax cap over the next three years for wealthy individuals, increasing it from £125,000 to £150,000 in 2018, to £175,000 in 2019 and to £200,000 in 2020. Such a strategy should be approached with some caution – I believe we should be encouraging entrepreneurs to come and relocate to the Island and so the Government needs to take care to ensure their taxation policies go hand in hand with the DED initiatives which aim to encourage businesses to start up here on the Island.
All in all, Mr Cannan’s first Budget had some big headlines but appears well balanced. There are some interesting angles and focus points and it will be intriguing to see how these are developed over the course of his 5 year plan.