Treasury Minister Eddie Teare MHK has announced the start of a public consultation on moves to further simplify the Island’s income tax system and lift thousands of the lower paid out of the tax net.

The proposals, first set out in this year’s Manx Budget, would see the abolition of the lower 10% income tax rate, the effect of which would be counterbalanced by a significant increase in personal allowances, from ?9,500 per person to around ?14,000.

In his Budget speech in February, Mr Teare explained that the change would leave the Island with a single personal income tax rate of 20%, after the personal allowance.

He went on: ‘I will announce the level of the personal allowance for 2016/17 in my Budget speech next year but my aim is to ensure that as a consequence of this change as many people as possible on low incomes benefit and I hope revenues will permit me to also ensure that nobody will be worse off.

‘It will mean that over 10,000 low paid people will no longer have a tax liability. It will also significantly simplify the income tax system and reduce the instances where income tax acts as a disincentive to paid employment. This will also enable us to divert resources to ensure that those who should pay do pay.’

The Minister today repeated his hope that income tax revenues this year would be sufficient to permit a level of personal allowance high enough to ensure that no-one paid more tax as a result of the removal of the 10% rate. He added that it was still too early to say with any certainty whether or not this would be achieved.

The Treasury consultation ‘Proposed Changes to Individual Taxation’ starts tomorrow (Friday August 14, 2015) and is due to close on Friday October 9. It will be available in the consultations section of the Government website –
https://www.gov.im/about-the-government/government/government-consultations/