TREASURY minister Lyndon Trott today unveils a ’soft landing’ zero-10 Budget. Despite gloomy predictions of widespread pain and tax hikes, he said it will have little impact on the average individual, even middle-income earners.
‘We’ve managed to produce a Budget that ensures a soft landing and that’s mainly because of the performance of the economy,’ said Deputy Trott.
‘The strong economic performance, we believe, is a result of business confidence in this island following the key decision of the States in June 2006 to reform corporation tax and move towards a zero-10 regime.’
But it is not all good news.
No increase in personal income tax allowances means they fall in real terms and there are duty rises on fuel, cigarettes and alcohol.
And people with company cars face big benefit-in-kind increases - up from £875 a year to £1,750 on a £25,000 vehicle.
On the plus side, Health and Education will both receive an above-RPI increase in their funding, but overall non-formula-led cash limits will rise only in line with inflation.
Tax on real property comes in to replace tax on rateable value.
TRP will hit the main beneficiaries of the zero-10 regime - regulated finance companies - hardest with a 400% increase.
‘I think that some members of the States have sought to paint a bleak picture about public finances and, at the same time, have fuelled people’s fears that individual taxpayers will be much harder hit as a result,’ said Deputy Trott.
‘We’ve been fortunate that the economy has performed strongly, as we expected it would, and the States has been sensible in its attitude towards public spending. That has meant that we’ve been able to minimise the taxation impact for the overwhelming majority of our community.
‘There are families with a combined income of more than £150,000 who will pay more than £2,500 a year extra.
‘But at the other end of the scale, for a pensioner with a fixed income it will be just a few pence extra a week and the impact will be more than compensated for by rises in their pension.’
He said he considered a middle-income earner to
be someone bringing in £25,000-£30,000 a year.
‘The impact on that individual will be minimal,’ said Deputy Trott.
Article posted on 9th November, 2007 - 12.00am
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