Robert Rotherham, senior tax manager at KPMG, considers one of the key themes emerging from this year’s budget speech
It goes without saying that the generation of employment opportunities is central to the fortunes of any economy. Another key measure of economic health concerns trends in the level of personal disposable income, or the ‘pound in your pocket’.
Treasury Minister Eddie Teare has attempted to address both of these issues in this year’s Manx budget.
The commitment of £1m for a new engineering centre of excellence, together with a £6m increase in the construction element of the capital spending programme and the retention of the National Insurance ‘holiday scheme’ are all aimed at the creation of jobs.
The slight increase in personal tax allowances and the move to exempt Employed Persons’ Allowances from income tax are designed to make the average taxpayer, but in particular those who work but are on a low income, feel a little more flush (no, that’s not a reference to the new ‘toilet tax’).
Interestingly, these concessions could be argued to come, at least partly, at the expense of the wealthy and the elderly.
Changes to the ‘tax cap’ effectively remove the ability of high-earners to benefit from the liability cap on an ad hoc basis – you now must make an irrevocable five-year election, should you wish to be tax-capped – while the age allowance (for those aged 65 and over) will be more than halved with effect from April 6, 2014.
The Treasury Minister has justified this latter measure by noting that during the five years to 2012 there was a 22 per cent overall increase in the state pension and pension supplement, compared to a 10.8 per cent increase in average full-time earnings.
We mustn’t forget that this focus on jobs and the employed comes at a time when the government has itself shed several hundred positions. However, this course of action was largely necessitated by the recent changes to the Common Purse Agreement with the UK and it would be churlish to criticise government for this, particularly at a time when it is taking steps to facilitate job creation in the private sector.
To read more budget coverage, see this week’s Manx Independent, which is in the shops now.
More budget analysis will be in Tuesday’s Isle of Man Examiner.