Isle of Man Budget 2019 Commentary
- Date: 07/03/2019
- Source: Portfolio Magazine (Isle of Man)
On the 19th February Treasury Minister Alfred Cannan announced his budget for 2019-20. In what Mr Cannan described as ‘a budget of confidence’ he announced that this year the government is forecasting a budget surplus of £28M, increasing his estimate significantly from a previous forecasted surplus of £10M.
The Treasury minister attributed this increase as a result of higher than expected tax receipts and lower than anticipated welfare support. 419 taxpayers were added to the workforce during the last year while unemployment remained low at 0.9% in January 2019. The government had previously introduced the SAVE Programme (Securing Added Value and Efficiencies) in the 2018 budget aiming to reduce government expenditure by £25M in 2021.
The Government continued to increase the personal income tax allowance by £750, the same increase as seen in the previous budget, to a level of £14,000 leaving individual tax payers better off by £150 per annum.
National Insurance rates will remain on hold, with Treasury anticipating that the pattern of increased contributions will lead to receipts £4M above the estimate for tax year 2018/19. The introduction of a ‘National Insurance Holiday Scheme’ was announced for employees moving to the Island and to encourage Manx students to return to the Island after further education in the UK or overseas, it is estimated that around 250 of these students leave the Island to pursue work elsewhere.
The minister expects e-Gaming, Insurance and ICT sectors to continue ‘double-figure’ growth this year. While there had been concern that a 10% corporate tax rate would be applied to banks, corporate profits will remain untaxed. The Island has already seen a significant decline in number of licensed deposit takers over recent years with the first new banking license in 20 years being issued last year under the recently introduced Alternative Banking Regime.
A programme of capital investment of £479 million was announced over the next 5 years to include the development an Isle of Man ferry terminal in Liverpool and on further infrastructure throughout the Island. This includes the development of the Island’s telecommunication network, the current network of approximately 50:50 copper wire and fibre optic would require upgrading to a 100% fibre network to offer all Island access to next generation 5G network speeds. Whether this involves a purchase of the existing infrastructure by the government and subsequent lease-back to the telecoms operators remains to be seen.
The government followed the UK’s adoption of the ‘Sugar Tax’ last year which will be introduced to the Island starting this April, with the initial £300,000 that is expected to be raised over 2019-10 to be used in programmes for weight management and other health care initiatives.
While there was some criticism by ministers including concerns over the continued growth of the government and lack of funding for health services Tynwald unanimously approved the budget.
Senior Portfolio Manager
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