Isle of Man Treasury Minister Slashes Personal And Corporate Income Tax Rates

Robert Lee, Tax-news.com, London

22 February 2001

The Isle of Man's Treasury Minister, Richard Corkill, presented the island's budget to the Tynwald earlier this week, the central element of which was a significant two per cent cut in the Isle of Man's income tax rates.

The standard rate is to come down from 14 per cent 12 per cent - with the top rate reduced from 20 per cent to 18 per cent - for both individuals and businesses with effect from April 6 this year. Personal allowances are increasing by 2.2 per cent. The changes, in line with the Government's announced tax strategy, will mean a total £10.5m off personal tax bills and a £7.4m saving for companies.

Trading Companies will pay the lower rate on the first £500,000 of their taxable income (previously £125,000), so that 76 per cent of local companies will be exempt from the higher rate.

A press statement from the Isle of Man government said it was 'able to reduce tax while increasing public spending and reserves because of strong economic growth boosting its receipts. The reductions deliver a major instalment of the tax strategy approved by Tynwald last October, which aims to secure future prosperity by keeping the Island attractive to business.'

Other Budget measures include an effective zero tax rate for fund managers and a £12 million transfer to the E-Commerce/ICT Fund. Offsetting the tax cuts, the Isle of Man government also announced that it is to increase non-resident company duty by £30 to £830 from 1 June 2001, and exempt companies fees by £30 to £430 from 6 April 2001.

Commenting on the budget measures, Mr Corkill told Tynwald: 'At the heart of Treasury policy is the desire to ensure that all within our Island community benefit from our vibrant economy, that the opportunities for advancement are available to as many as possible, and that the wealth created is shared by those genuinely less able to help themselves.'

He continued: 'I want to emphasise that we are keenly aware that it is our business competitiveness that fosters economic development, which in turn generates the Government finances to be able to meet the level of public spending to which Government aspires. However, I also believe it to be a Budget that delivers impressive increases in Government spending. A significant proportion of that expenditure supports those less fortunate within our society be it as a result of poor health or low income. It also supports our Island's future generations by funding our educational programme.'

Mr Corkill used his budget speech to praise the Isle of Man's "remarkable achievement" in maintaining economic growth and full employment during a period of international pressure. He said: 'The next administration will start from a position of strength and with a number of core initiatives underway - in e-commerce and the new tax strategy - that I feel will reposition this Island at the top of the league of successful jurisdictions in coming years.'

He concluded: 'I feel extremely fortunate to have been able to take the helm at the Treasury through a period of major economic development and to be able to conclude this series of Budgets with one which delivers major tax reductions for people and businesses throughout the Island, further increases Government spending on services to a significant extent, strengthens further our Reserves and enhances the competitiveness of Island business.'

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