Budget Speech

[simon]

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?

 

Neither the Treasury Minister nor any Manx bank has the power to influence interest rates in Douglas. Taxation is the only method of controlling the amount of money in circulation and hence inflation. Ireland has faced a similar situation since joining the Euro.

 

High inflation should mean a policy of higher taxation ... for both individuals and companies. If you think that Keith Joseph and co were basically right.

 

But perhaps the Treasury Minister quite likes a bit of inflation. Some people think that a bit of inflation is sometimes good for an economy.

 

PS

 

It would be fascinating to know what he thinks in private about the relationship between taxation and inflation. And to know how that thinking is being influenced. Equally - it would be interesting to know who he believes will have more and less money to spend over the next year ... based on current trends and policy.

 

Are the Treasury or other government papers released after a set period of time? It would be great to know a little more about how these decisions are reached.

[Fatty Fatty Toad Boy]

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.

<{POST_SNAPBACK}>

 

Last year you bought £10,000 worth of goods and the personal allowance is £8,230.

Your tax liability is ( £10,000 - £8,230 ) * 10% = £177

 

This year the same goods will cost you £10,600 (6% inflation) and the personal allowance will be £8,500.

This year's tax liability will be ( £10,600 - £8,500 ) * 10% = £210

 

So you are £33 worse off.

 

The question is, if everything's so rosy why are we required to pay more tax?

[simon]

I'm certainly not critical of Civil Servants.

 

Meanwhile - I'm having a problem getting my head around the Fatty Fatty Toad Boy's thinking.

 

In the example above - we'll be paying more tax (more money) if our incomes have risen by more than £270 over the year. But at the same rates.

 

And what we have left will be worth less because of 6% inflation.

 

But I don't get the way he has explained it in terms of £10k of goods.

 

PS -

 

Inflation erodes the value of savings in particular. So is sterling worth less on the IOM than in the UK?

[Fatty Fatty Toad Boy]

Inflation erodes the value of savings in particular. So is sterling worth less on the IOM than in the UK?

If income rises do not match inflation then effectively yes. If it costs more to live in a particularly place (because inflation make things more expensive) then the money in your pocket will not go as far. If it buys you less then it is worth less.

 

Anyone know what the Island's wage inflation is running at? Mr Bell didn't appear to mention it.