Isle of Man budget 'hits middle earners hardest', MHK says

BBC News

18-02-2025

A move to reduce income tax by 1% but reset National Insurance thresholds will place an increased burden on middle earners, an MHK has said.Juan Watterson outlined concerns that measures in the Isle of Man Budget 2025-26 would leave some people would be left worse off.But Treasury Minister Alex Allinson told Tynwald moving the thresholds up would assist the lower paid.The budget included a reduction in the island's higher income tax rate coupled with a £250 increase in the personal allowance, along with a rise in the National Insurance (NI) changes.
Watterson said to fund the £10m reduction in income tax, the government had "shifted the burden onto national insurance contributions", resulting in fewer people paying to cover the "same tax need", which was "fundamentally unfair".He said the group who were "hardest hit" by the budget were the "squeezed middle", and those in their 40s "should be concerned about the long term sustainability of their Manx state pensions".John Wannenburgh raised concerns over the budget's reliance on £110m from reserves, which he said was "inherently unsatisfactory".But Chief Minister Alfred Cannan said the majority of families would be "better off" next year due to the budget, and it was "putting money back into people's pockets".
Lawrie Hooper said the budget would see a £20m "raid" on the NI Fund to pay for a shortfall in income from contributions to pay for state pension, certain benefits and the NHS.Hooper said Manx Care would need a budget closer to £370m, instead of its allocated £357m and the only way to meet that budget would be to "bring forward significant cuts to services".Health and Social Care Minister Claire Christian said the department would be applying an additional £4.3m, increasing the allocation to Manx Care for its mandate to £361.8m.She said changes supported by additional investment, a drive for efficiencies and "openness about constraints to increased activity" provided an opportunity to "reset and lay the foundations" for future health and social care services.She told Tynwald her department would not be bringing forward service developments next year unless more funding was secured.Allinson told Tynwald members that the NI Fund was not being raided as contributions were going to the NHS but the fund remained the same, and the long-term impact of that remained "minimal". He said despite the need to draw down on national reserves, they were forecast to grow over the medium-term from the current £1.86bn to £2bm by 2029.The budget received the backing of 16 of the island's MHKs and was unanimously supported by the Legislative Council.
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