The Local Economy Forum (LEF) has welcomed the Treasury Minister’s decision to raise the personal tax allowance to £17,000, describing it as a ‘swift and decisive’ move to restore what it sees as long-overdue adjustments.

The increase, announced by newly-installed Treasury Minister Chris Thomas in his first Budget on Tuesday, will see taxpayers lifted out of the income tax net and hundreds of pounds added to take-home pay.

Mr Thomas said the rise of £2,250, taking the allowance from £14,750 to £17,000, would benefit around 36,000 people and make many nearly £500 better off each year.

Jointly assessed couples will begin paying tax on earnings above £34,000.

In a statement, the LEF praised the move, noting that when combined with the proposed 5% increase in the minimum wage, the take-home pay of those most affected will be close to what would have been achieved had a previously proposed 10% increase been enacted.

The group, set up late last year to highlight concern over the minimum wage rise, highlighted the broader context, pointing out that over the last five years income tax revenue has jumped from £250m to £413m, while the Government wage bill has risen from £439m to £605m, despite the local economy remaining largely flat and reserves being heavily drawn upon.

The forum said: ‘It is past time that these deeply serious issues were dealt with, and the decisive action on Mr Thomas’ part is indicative of a new determination to do so.’

Mr Thomas, emphasising both financial discipline and investment in public services, warned of the risks of over-reliance on reserves to balance the books.

The Budget also includes £45m for the under-pressure health service, additional funding for island security, and a new focus on capital spending.

The personal tax allowance increase, the largest in recent years, is part of a wider plan to inject ‘stability, security and confidence’ into the Island’s public finances while gradually reducing reliance on reserves.