The UK Budget will cost the Manx Exchequer some £300,000 in lost income.
One of the headline grabbers in George Osborne’s Budget was a penny a pint cut in beer duty.
But Treasury Minister Eddie Teare said this would mean lost revenue for our government, although the loss will be slightly offset by the increase in duty on tobacco which rises by 2 per cent above inflation. He said: ‘The total cost to the island is £300,000 a year.’
In terms of the government’s overall budget of £920m it’s small beer.
Among the other key announcements in the UK Chancellor’s Budget was an increase in the personal tax allowance – the income individuals can earn before paying tax – which rises to £10,000 in April and goes up again to £10,500 in 2015-16.
The personal allowance in the island also increases in April but it will still lag behind the UK. Mr Teare announced in his Budget last month it was rising by £200 to £9,500.
He told the Courier that to increase rates to the UK level would cost £9m a year. ‘We have no room for manoeuvre to do that. We are coming to the end of our main rebalancing programme.’
Mr Teare said one of the most interesting things in the UK Budget was the rising forecast for growth with gross domestic product now expected to increase by 2.7 per cent this year and 2.3 per cent in 2015. He said the increasing confidence in the UK economy set the ‘mood music’ for the island’s own economy.
One of the surprises in Osborne’s Budget speech was the announcement that retirees would no longer be forced to buy an annuity with their pension fund.
Mr Teare said: ‘This is something we will be having a look at. The biggest problem is it could lead to people raiding their pension fund and squandering it, and then having to depend on social security for the rest of their lives.’
The Treasury Minister said Osborne had made some comments on tax avoidance and stopping the rich and companies shifting their profits offshore. One measure he announced will see those who have signed up to disclosed tax avoidance schemes now paying their taxes up front, like everyone else.
Mr Teare’s team will now look at the Budget’s small print.
The Isle of Man’s customs agreement with the UK means that we pay the same rate as the UK on many indirect taxes, such as VAT and duty on alchohol and cigarettes. The UK Chancellor sets those taxes.
The money raised here from those taxes then goes to the Manx Treasury.
Tuesday’s Isle of Man Examiner Business News will have more on how the UK’s Budget will affect the Isle of Man.