No big surprises in this years budget – a pretty unimaginative “Steady Eddie” for another year running.
Whilst I agree with the principle that “tax and spend” is not the way forward, we have not yet reached a situation where our tax regime is balanced and fair. There are a number of sectors that could be contributing at the 10% rate and there should be a full consultation to see if this could be workable. I’m confident that Companies that operate on the Island want to play their part in rebalancing our public finances, and would be willing to work with Government on a tax regime that is acceptable to us all – as would a number of High Net Worth Individuals. There are also a number of companies who are choosing to pay tax at 10%, even though they don’t have to! Let’s ask them why, there may be some underlying commercial reason here that could be expanded and offered to more companies – is this a potential growth area?
The National Insurance Holiday for new employees has created over 1,000 jobs, and although the end was already announced there was a small hope that it would be extended again. I’d like to have seen this scheme made permanent, perhaps in a reduced capacity (no NI payable for one year for new employees), rather than extinguished and replaced with a hugely watered down scheme. Government should be encouraging and assisting businesses to grow, and tax incentives are a proven way to do this.
Looking forward the proposed changes in 2016 I’m surprised that the Treasury Minister is starting to align himself with LibVan policies.
Removing the Personal Allowance Credit and replacing it with a more encompassing welfare system – thereby making tax a system for collecting revenue, and welfare a system for distributing it – is a step in the right direction. Equally, taking the lowest earners out of tax completely by increasing the personal allowance is straight out of the Liberal playbook. Why not go a step further, in the UK when your income reaches a certain level (£100k) your personal allowance starts to gradually decrease. This “tapering” of the personal allowance would help pay for a further increase in the basic allowance for lower paid workers, taking even more people out of the tax net.
Looking at the wider budget, are we willing to accept the claim that the books are balanced? We’re still drawing on reserves to pay for capital expenditure, so how can the Minister claim to have balanced the books? Reserves will be depleted to dangerously low levels over the rest of this administration and now is the time to act, let’s not wait until it’s too late before plans start to be made.
This is evident nowhere more than when looking at pensions. It is widely accepted that significant changes need to be made to both the state pension and public sector pensions, and starting the process now is essential to make sure that all stakeholders are consulted, and that we end up with a system that is fair to public sector workers, as well as being fair to the taxpayer.
There’s a general theme running through – that Government should be planning ahead, consulting widely, preparing for the future, and not making policy on the hoof. The Ministers Budget Speech, if not the budget, is at least a step in the right direction.