Isle Of Man Reflects On Challenging 2010

by Amanda Banks, Tax-News.com, London

07 January 2011

The Isle of Man Chief Minister, Tony Brown has published a New Year message, noting the fiscal challenges that the Isle of Man has been forced to overcome in 2010.

“The year 2010 saw the Isle of Man take the first steps on the road to readjustment following the revision of our VAT revenue sharing arrangements with the United Kingdom.”

“The Manx government has chosen a careful and planned approach to this fiscal challenge in order to avoid unnecessary disruption to the island’s economy. Nevertheless, the journey we have embarked upon is a testing one that demands some very difficult decisions along the way.”

“The Budget delivered to Tynwald in February 2010 was the first installment in a five-year strategy to rebalance the government’s finances. It reduced net revenue spending overall by 6.5% or GBP37.1m, increased the higher rate of personal income tax from 18% to 20%, implemented a 1% increase in employee National Insurance contributions, and transferred GBP15m from [our] reserves.”

“At the same time the Personal Allowance Credit for the least well-off was increased by 18%, the income tax personal allowance went up by 1%, and GBP96m was provided for a capital spending programme to support jobs in the construction industry. Also announced were a freeze on staff salary budgets and the loss of nearly 100 government posts through non-replacement of vacancies, the latter saving GBP3m in salary costs.”

“Meanwhile, a major restructuring of government departments centred on the creation of a Department of Economic Development to spearhead a renewed drive to generate more business for the island, a vital task that is more important than ever in the current fiscal climate. Other changes progressed during the year reflect the need for government to adjust to new realities and to modernize and streamline its approach,” Brown continued.

“While the Isle of Man does indeed face a fiscal challenge - as do many other countries around the world - our economy is holding up well, which is a tribute to the diversity and resilience of the island as a leading centre for international business. To pave the way for further economic success in the future, so that we can sustain employment and public services, it is essential that the Isle of Man nurtures its international relationships and its reputation as a responsible nation.”

“Looking ahead into 2011 I can make no promises that the road before us will get any easier, but I know that our community has the strength, skill and resources to keep moving forward. The government for its part will continue to work in the national interest of the Isle of Man as a whole, considering the longer term as well as the short term, so that we can secure the future for all the people of this island.”

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