Isle of Man Budget Comment - Stuart Foster
For businesses operating in the Isle of Man, the budget showed promising signs that the Island’s economy is doing well which can only benefit marketing our jurisdiction. There is welcome news for businesses who have struggled to recruit staff in recent years with signs that the economy is growing, and suggestions the Island’s population is increasing. I’m sure most businesses will be hoping this news and other measures introduced in the Budget will attract a new pool of talent to the Island.
Current year income tax receipts are up by £13 million and the last year has seen the creation of 280 new jobs. I believe if we are to grow as an Island, we need to attract new people and new businesses to the Isle of Man. To do so it will be necessary to promote the economic growth and jobs available.
The increase of £750 in personal income tax allowance is welcomed by everyone as it will benefit almost all tax payers on the Isle of Man taking a single personal tax free allowance to £13,250 p.a. and £26,500 p.a. for a jointly assessed couple. It has been suggested that it will move 1,700 people out of income tax which is good news for families on lower incomes. The lack of any increase in National Insurance (“NI”) Rates will also be welcomed by those in employment.
As well as reducing taxes, the Government is also seeking to attract more people into the labour market by introducing a further £1.5 million in pre-school credits. It is hoped this will make it more affordable for parents who have been staying at home to look after their children to return to work. This is a positive move that should create a bigger pool of candidates for the available jobs and encourage a more competitive labour market, especially benefitting those employers willing to offer flexibility for parents of younger children.
It’s interesting to see that there are measures to introduce new freedoms in respect of Isle of Man pensions, which will surely be welcomed by those businesses operating in the Pensions industry, but this good news is tempered to some extent by the reduction to £50,000 of the annual contributions limit to pension schemes.
The figures in the Government’s publications released with the Budget that really caught my attention were the projected annual spending per person on the Island of £12,667 per person per year and that over 10% of that figure (£1,278) appears to be spent on former Government employee pensions. For a long time, I have listened to people raising concerns about the Public Sector pension “black hole”. For me, these simple numbers bring into sharp focus that the problem is not one for the future but something that must be addressed in the present if we want a stable economic future.
“A Budget of Substance for an Island of Substance” was the Treasury Minister’s strapline, but it was a pretty quiet budget with no huge surprises. I was pleased to see the Government’s revenue; the number of jobs and the Island’s population are all increasing, and I hope the measures introduced by this Budget will enable these trends to continue.