DCSIMG

Today is Budget day in the Isle of Man

Eddie Teare MHK

Eddie Teare MHK

There are likely to be few surprises in store as Treasury Minister unveils what is certain to be a ‘Steady Eddie’ Budget today.

It will be Eddie Teare’s third Budget and 2014-15 is also the third and final year of the government’s programme to rebalance public finances in the wake of the VAT bombshell.

Mr Teare will be certain to tell Tynwald that the rebalancing programme is on track – although there’s more work to be done.

He’s said previously he doesn’t believe in a ‘slash and burn’ approach to cutting government spending or indeed a ‘tax and spend’ policy.

And Chief Minister Allan Bell, too, has ruled out tax rises as very much a last resort.

The government has lost a third of its income - some £200 million – through the UK’s forced revision of the VAT deal.

The Isle of Man currently gets about £270 million. The UK Treasury wants the island’s share to be equivalent to what we would receive if we had a standalone VAT system. A data collection exercise is being used to determine the size of the VAT share in the future. Data is currently being analysed.

Mr Teare says government has to be more imaginative in its cost-cutting. Measures such as bringing together back office roles have driven out significant costs.

But the elephant in the room for government expenditure is the island’s ageing population and the cost of the State pension.

When an early form of State pension was introduced in 1906 it was means-tested and the average person died well before the age of 65.

Now it’s a universal benefit and the average person lives another two decades into retirement.

Another priority in the years ahead is to replenish the capital fund which is due to shrink to just £1 million by next year.

 

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