Means testing tuition fees dubbed ‘stealth tax’

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MEANS testing over tuition fees was a stealth tax on high-income earners, it was claimed in the House of Keys.

The claim was made by Michael MHK Alfred Cannan who quizzed Treasury Minister Eddie Teare over the proposal for a sliding scale of means tested contributions towards university tuition fees to apply to families with an income above £100,000.

Mr Teare told MHKs: ‘The Treasury supports the general principle that means testing can be a fair and appropriate method for determining the level of support that an individual or family receives from government. In order to complete the rebalancing of government finances, as scheduled by 2016, all departments will be making difficult decisions responding to reduced budgets.’

But Mr Cannan said the proposed policy was at odds with the stated principles of the recently delivered Tax Strategy.

He said: ‘I have to disagree with the Treasury Minister, because whichever way you look at it, this is a tax.

‘It is a stealth tax, and it is a tax on a particular section of society.

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‘In comparison with the Tax Strategy – which aims to be fair, supportive of economic development, easy to understand, simple to administer and build on the international reputation of the Isle of Man – this means testing proposed for university tuition fees meets none of these principles, and it will put at risk jobs and economic development, as well as being socially divisive and inconsistent with other areas of government policy?’

‘We had a nice tirade there,’ the Minister replied. He insisted: ‘This is fair. It is socially fair, and I feel comfortable with it.’

He said, at the moment, the means-testing would be based on gross income.

Kate Beecroft (Lib Van, Douglas South) suggested some wealthy individuals could structure their affairs so that on paper they appeared to have very little income, and will be able to receive funding for their children to go to university.

Mr Teare said the Income Tax department would take a close interest in any aggressive tax planning. He suggested basing the scheme on net income would have provided ‘an ideal opportunity for tax management’.

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