IoM Plans 'Leaner' Government Over Tax Hikes

by Jason Gorringe, Tax-News.com, London

Tuesday, February 07, 2012

The Isle of Man's Treasury Minister Eddie Teare has said that the forthcoming budget will see the most dramatic changes to the Manx government since the introduction of the Ministerial system over 30 years ago, as part of a retrenchment package to make government finances sustainable.

Ahead of the publication, government officials have confirmed few details of the budget, but have indicated that it will predominantly comprise expenditure-cutting measures, rather than a marked increase in tax. Teare confirmed the earlier statement by the island's Chief Minister Allan Bell that his budget would review the scope of government with the objective of reducing the government's GBP300m (USD475m) salary bill by 10% within the next three to four years. The government will also examine possible changes to universal benefits and the planning system.

Commenting ahead of his budget, Teare stated:

“The Chief Minister has set the direction of travel for his government and when you look at his statement it is really an agenda for historic change, certainly the most radical since the Ministerial system came in during the mid-1980s. Doing nothing is not an option. If our children, grandchildren and future generations are to live in a prosperous and caring society the island has to make its government smaller and its economy bigger. That means a leaner, fitter government with a business-friendly approach across the board and a can-do attitude to economic opportunities.”

“However, the process of adjusting to the new financial reality takes time and a quick solution is not possible. The government is also aware that a drastic slash and burn approach to cutting public spending could damage the local economy.”

“The forthcoming Manx Budget should therefore be seen not in isolation but as a work in progress. It should be viewed in the context of the steps that have already been taken towards budget rebalancing and the further changes that might be expected over the next three or four years. It is important to look at the whole picture, not just one part of it, and I agree that the approach overall has to be fair in examining all areas of government spending and operations in due course. Clearly I cannot comment on the specifics of the 2012 Budget at this stage. But I can confirm that departments have had some difficult choices to make to meet the targets that are necessary if we are going to put the island’s public finances back on an even keel.”