Date: Monday 27 February 2023
The Isle of Man Chamber of Commerce described the Isle of Man budget as a ‘placeholder’ and, while there are some measures which are welcome, members would have liked to see Government doing more to address the fundamental issues that are affecting businesses and limiting economic growth.
Chamber – which has members who represent approximately 75% of those employed in the Island’s private sector – has several points of concern:
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While the private sector is feeling the pressure with multiple cost challenges, including rises in the minimum and living wages, the Budget includes £40million being for Government pay increases and has only challenged departments to find just 1.5% in non-pay. It appears Government is ignoring the extreme cost pressures being faced by the private sector and is using tax payer funds and reserves to ‘carry on as normal’, rather than facing the reality of the challenges to make Government more efficient.
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Chamber's calls for lowering freight charges to help local businesses have been ignored and the Steam Packet is to pay a £1million dividend to Government. This is nothing but another tax on all businesses that bring goods to the Island to sell, especially food retailers, and are then forced to pass the costs onto the public.
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The moves to a more progressive income taxation structure are welcome, however this only appears to catch around 1,500 workers, 200 of which are in the public sector. Chamber is also concerned about the lack of narrative around these changes and future plans which will only increase total Government revenues by approximately 0.25%.
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Chamber is extremely concerned about the continued failure of Government to address the shortfall in the public sector pension fund which, this year, appears to have had the hole plugged by drawing down on reserves of approximately £77million. This continued depletion of reserves is unsustainable and Government must ensure it addresses efficiency challenges to return to a position of surplus revenue.
Looking at the Budget overall in the broader context of Government’s handling of the economy, Chamber feels strongly that the Treasury is ‘tinkering with the edges’ and not getting to the heart of the challenges facing the Island. Treasury now appears to have devolved responsibility for growing the economy to the Economic Strategy Report and the associated £100millon fund, however, the details of how this will work are not clear. Following the budget speech, Chamber members are demanding to see more clarity regarding the Government’s plans for enabling economic growth in order to build a strong, diverse, export focused and sustainable economy.