BBC
Alex Allinson said he was “working on” the Isle of Man’s response to parts of the UK’s recently announced Budget
While facing similar economic pressures to the UK, the Isle of Man can offer people and businesses “stability” in “uncertain times”, the island’s treasury minister has said.
Alex Allinson was speaking after UK Chancellor Rachel Reeves delivered her Budget speech in the House of Commons on Wednesday.
She announced a raft of measures, including a freeze on income tax thresholds, several new taxes and changes to welfare.
Allinson said some of the measures were “reducing the stimulus for private investment and private wealth creation” in the UK, which could “encourage people to either stay on the Isle of Man or perhaps move over here and invest”.
‘Join our communities’
He added: “People see the advantages of living on the Isle of Man, not just in terms of taxation but also the quality of life, safety, access to really good quality health services and education.”
Allinson said the island was “increasingly attractive” and stressed that the government was working to “grow the active working population” by “encouraging graduates that have left to come back and also encouraging new people to join our communities”.
He said: “We can have a really stable economy here, a stable political and government environment, that can get our of their way and enable them to do the things that they want to do both for their businesses and their families.
“We’re living in very uncertain times not just in the UK but across Europe and across the world. “
While many of the recently announced UK changes do not directly affect the Isle of Man, Allinson said the Manx government was “looking at” and “working on” several measures.
“For instance bringing in a vaping duty, we’ll probably need to think about whether we want to follow suit,” he said.
‘Shared agreement’
A number of decisions outlined by Reeves will apply directly through the Isle of Man’s shared customs and excise agreement with the UK.
Some immediate changes have already been made, however, including a rise by the Retail Price Index (RPI) plus 2% in duty rates for tobacco products.
Rates for alcohol are also set to increase on 1 February, in line with the RPI measure of inflation in the UK.
Also as a result of the shared agreement, fuel duty on the island will continue to be cut by 5p per litre until September 2026.
Other key considerations are around National Insurance (NI).
The island has its own National Insurance scheme and fund, which totals more than £1bn and pays for islanders’ pensions and other benefits.
While the UK is freezing NI thresholds until 2031, Allinson said he hoped to increase them “so that the tax burden on the low paid is reduced”.
Allinson said NI changes in Westminster could still affect Manx residents “who perhaps are paying National Insurance contributions because they spent some time in the UK and can therefore get a UK pension”.
He said the UK was “going to crack down and increase the cost of that”.
“We need to work with the UK to make sure that Isle of Man residents have the same benefits from some of the reciprocal agreements as the people on the adjacent isle,” he said.
‘Indirect taxes’
Other announcements, while seemingly irrelevant to the Isle of Man, may have indirect impacts, Allinson explained.
The Treasury was “keenly” looking out for any changes to VAT and areas where there would be an “indirect tax to the island”.
He said: “We know particularly food inflation has directly affected us here because we import a lot of our food from the UK.”
But he said “most of the projections” predicted inflation would “remain relatively steady” and “decrease over the next two years”.
“Hopefully some of those really big inflationary increases we’ve seen should start cooling off,” said Allinson.
Meanwhile, an extension of the tax on sugary drinks was both about raising extra money and changing behaviour, he said, adding that companies had two years to modify sugar levels which would lead to long-term “health benefits”.
Allinson will unveil his Manx Budget in February.
He said: “There was nothing in [the UK Budget] at the moment that would significantly alter some of the long-term plans that this administration has set out to try to increase median earnings, to try to increase the amount of money that people have in their pockets to spend in the local economy.”