THE government’s taxation strategy until 2016 received a unanimous vote of approval from Tynwald members.
Treasury Minister Eddie Teare told members personal income tax rates would remain competitive and there was to be no change to basic personal allowances for married couples and civil partners.
For businesses the zero-ten tax rating (10 per cent for banks and zero for other businesses) would be retained.
‘Individuals constitute by far the biggest group of taxpayers in the Isle of Man. The consultation (on taxation strategy, conducted among the public last year) showed our community does not see a need for major changes in the way that people are taxed. Having a regime which is based on simplicity and low rates of tax can make the island more attractive to people who are considering moving here to work,’ he said.
However he suggested a simplification of the system could see some tax allowances and reliefs removed and an increase in basic personal allowance or a tax reduction brought in to compensate. Moreover the annual burden of filing a tax return could become a thing of the past for individuals with simple tax affairs, with more information provided instead by financial institutions.
People are also to be encouraged to use on-line tax services.
Long-standing reciprocal social security arrangements with the UK mean the Manx and UK benefits and National Insurance systems are almost identical making it easy for people to move between the two juridictions.
But given the major changes proposed by the UK government, for example to state pensions, Mr Teare said it was appropriate to consider if the current reciprocal agreement with the UK remained fit for purpose. He added, income tax and national insurance could be brought together into a single system that would be simpler and easier to administer.
Describing the island’s business tax system as ‘a fundamental aspect of our economic competitiveness’, Mr Teare said in addition to retaining the zero ten corporate tax system he also wanted to support business investment and to simplify the tax system for unincorporated businesses.
A survey of the island’s spending patterns based on household income and expenditure is already under way and a business survey is to be carried out. This should be complete and the results analysed in about 18 months’ time.
The information will be used to calculate the island’s allocation of VAT revenue but until this is complete the island had agreed a provisional share of the VAT, customs and excise revenue of £270m for 2013-14.
A final figure is to be decided once the surveys are complete and any adjustment made as necessary.
On international taxation matters, quoting from the original taxation strategy of 12 years ago, Mr Teare said; ‘The Isle of Man remains committed to preserving the island’s status as a top-class financial centre with good regulation and co-operation with other jurisdictions.’
Accordingly, he said he would continue to develop tax co-operation agreements and information exchange for taxation purposes.