Budget Speech

[When Skies Are Grey]

Budget Speech

 

In case you were interested. Lots of reference to zero-tax rates for companies other than that quite dull really.

[Stavros]

The tourism sector is slowly but surely recreating itself to meet the demand of the modern visitor. We have secured the reduced rate of VAT on tourist accommodation, I have created the opportunity of providing additional marketing resources and as the “third leg” of this assistance, I now offer a zero-rate of company taxation to those in the tourist accommodation sector.

 

That'll be good news for some people!

 

Stav.

[Stavros]

Some of the more interesting bits:

 

In respect of individuals, this Honourable Court will be pleased to learn that I feel able to increase Personal Allowances again this year. For 2005-6, the Personal Allowance will rise by 3.3% to £8,500 for an individual and £17,000 for a married couple.

Corresponding percentage increases in the nursing expense relief, blind person allowance and disabled person allowance will be made. In addition, the tax threshold will be increased this year by 3% to £10,300 for an individual and £20,600 for a married couple.

These changes will take approximately 700 individual taxpayers out of the tax net.

 

I have decided that the Basic and Higher rate of tax for individuals will remain at 10% and 18% respectively this year.

 

Stav.

[Mission]

Have fags gone up?

 

I said I'd quit when they hit £5 per pack and they're already at £4.89 per pack now.

 

Hopefully they've done the usual and taxed them some more so I can finally give up!

[happy camper]

Fags and booze aren't done by the IOM but the UK.

[Stavros]

Just when I was going to tell him that cigarettes were now going to be £10 per pack, you go and spoil it!

 

Stav.

[Stavros]

From April 2005, the basic pension is to be increased by £2.45 to £82.05, thereby increasing the weekly pension supplement by £1.23 to £41.03. For a pensioner married couple with the wife qualifying on her husband’s contributions, their basic pension plus supplements of £196.80 per week will amount to £65.60 more than the basic pensions of £131.20 payable in the United Kingdom.

 

Each year, more and more public money is required to fund the maintenance of public services. In 2005-06, additional costs amounting to some £2.5 million have been

identified in connection with the running of the Energy from Waste Facility, which

continues to be predominantly funded by the taxpayer.

 

I had forgotten about the Waste of Energy Facility!

 

Stav.

[When Skies Are Grey]

In a nutshell:-

 

Extension of zero tax rate to businesses operating within manufacturing, agriculture, fishing, film, e-gaming and tourist accommodation industries;

£34.5 million or 7.7% increase in net Departmental revenue spending on public services;

Personal Allowances Credit band increased by £275 to £2,500 for individuals who do not fully utilise personal allowances, with the maximum Personal Allowance Credit increased by 12.4% to £250;

Income tax personal allowances increased by 3.3% to £8,500 for single persons and £17,000 for married couples;

Personal income tax standard rate stays at 10%, with the higher rate remaining at 18%;

Tax relief on Educational Covenants extended to include those aged 16 to 18 attending approved courses;

Income tax rate for trading companies remains at 10%;

Company tax higher rate remains at 18% for non-trading income;

Commercial Building Allowance for Ramsey, Peel and Port St Mary extended for a further year to 2006;

Exempt company fees increased by 5% to £475;

£11.7 million surplus expected in 2005-06; £9.1million surplus in the current year;

Capital programme at £92 million to be financed without recourse to external borrowing;

Income Tax personal allowances increased by 3.3% -

Single Person’s Allowance £8,500

Married Couple’s Allowance £17,000

Single Parent Allowance £14,300 (including Single Person’s Allowance)

Registered Blind Person Additional Allowance and Disabled Person Allowance £2,610

Thresholds at which higher rate becomes payable increased by 3% -

Single Person increased to £10,300 of taxable income;

Married Couple increased to £20,600 of taxable income, fully transferable between husband and wife;

Single persons may have incomes of £18,800 before paying tax at the higher rate of 18%, whilst for married couples this figure is £37,600;

[Speckled Frost]

What an incredibly 'safe' budget.

 

A little too safe perhaps.

 

He talks about guarding against complacency in the first par but I don't see anything to diversify the economy or fight against losing out to cheap labour areas.

 

Taxation policy will only take you so far.

 

Apologies, I may have missed something because I actually fell into a coma half way through.

[When Skies Are Grey]

It was bound to be safe given the hammering that the Govt have taken over the past year or so. Evolution not revolution I suppose. Will be interesting to see how the zero-tax regime will affect us both in terms of local businesses and worldwide acceptance (or otherwise) of the non-harmful taxation policies.

 

And according to the breakdown of the figures, 56% og the Govt revenue comes from VAT. Would leave a big hole if we came away from the common purse agreement with the UK.

[crumlin]

The tourism sector is slowly but surely recreating itself to meet the demand of the modern visitor. We have secured the reduced rate of VAT on tourist accommodation, I have created the opportunity of providing additional marketing resources and as the “third leg” of this assistance, I now offer a zero-rate of company taxation to those in the tourist accommodation sector.

 

That'll be good news for some people!

 

Stav.

<{POST_SNAPBACK}>

 

 

How does this work for those who have registered Holiday Homes but rent them out t workers at £850 per month

[simon]

I think that he was right to highlight the need to begin to think about final salary government pensions - which seem, longer term, like an unsustainable promise.

 

Any renegotiation of pensions provisions will be hugely controversial and unpopular. Especially if that renegotiation involves retrospective changes to workers' terms of employment (such as raising the retirement age, reducing staffing levels and cutting wages - as in some countries where similar issues are beginning to be addressed).

 

I wonder whether he isn't hoping that any actual policy changes in this direction will be for a future Treasury Minister.

 

IIRC - the proportion of working age people employed by the various forms of government on the IOM has now reached something like 40%. (???) That percentage maybe goes higher if you also include people working for private companies with government contracts.

 

Then factor in the rising number of retired people on Manx government final salary pensions. You're looking at a huge (and increasing) proportion of the budget comprising money which is essentially being recycled through the economy by the government, through taxation, wages and pensions.

 

The other (less than) 60% of the workforce are going to have to be doing very well to pay that bill, longer term. Or else we will need a huge influx of retired tax payers and the wealthy who have their pensions, salaries and other income paid from the UK or abroad.

 

My understanding is that unsustainable government spending will impact much sooner (reach a critical point) in a tiny economy (based on tax paying population) than in a larger single economy (like, say, the Euro zone).

 

***IMO****

[Fatty Fatty Toad Boy]

Income tax personal allowances increased by 3.3% to £8,500 for single persons and £17,000 for married couples;

With inflation at 6%, this is in effect an increase in taxation.

[Stavros]

I'm not quite sure how the maths works for that. If you increase the pesonal allowance and you have a higher than UK inflation, how does it lead to an increase in taxation?

 

I would have thought that inflation could still be reduced regardless of the personal allowance.

 

Stav.

[happy camper]

Final salary pensions should stay. Why else would you work for the Government? Rubbish salary, no perks eg staff discounts like you get in shops and other businesses, and having to work with politicians.