Le Sueur claimed that the government can afford to cut taxes because of the States' healthy financial position and the positive decision on GST.

The Minister will be proposing increases in the thresholds at which income tax is paid by 6.5%, well above the rate of inflation currently 3.9%. The 6.5% increase is made up of an initial 3% increase proposed in the original Budget Statement in October, plus a further increase of 3.5% arising out of the commitment given by the Minister during the recent GST exemptions debate to compensate low-to-middle income households for the effects of GST.

The 6.5% increase in tax thresholds will mean that a married couple will pay GBP320 less in tax than in 2007.

This increase in income tax exemption limits is in addition to a 20% increase in the tax allowances for children and students in higher education. A household with two children, one at university, will be at least a further GBP300 better off.

The Minister will also propose raising the value of properties on which first time buyers pay reduced stamp duty to GBP300,000. This means a first time buyer will save almost GBP2,000 on the stamp duty due on a GBP300,000 property.

The combination of the increases in income tax exemption thresholds and allowances are designed to reduce the impact of GST on low and middle earners, particularly those with families. If approved, it will mean a working couple with 2 children (one at university), paying about GBP14,000 interest on their GBP200,000 mortgage, can earn over GBP46,000, before they start to pay any income tax. Meanwhile the rise in stamp duty discount for first time buyers is intended to help people entering the property market.

The Minister will also be announcing simpler and more wide-ranging pension provision for those individuals wanting to invest in private pension products. The proposals provide for a new trust vehicle which will offer greater choice and a more cost effective, flexible and transparent pension option.

There are also proposals to simplify income tax processes with the announcement that from January 2010, self-assessment and submission of all personal tax returns will be also be available through the Income Tax electronic online service. As an incentive to taxpayers, a GBP20 credit will be offered when they file their return and self assess electronically.

Finally, Le Sueur stated that the proposed transfer of GBP25 million to the Stabilisation Fund will be particularly welcomed by the business community, and will mean that the Island is better placed to stimulate the economy in less buoyant times, to improve economic stability, contain inflation and create the conditions for sustainable economic growth on the Island.