Presenting his fourth Budget, Mr Teare said it honoured Government's promise to balance the books:
'Four years ago I laid out this Government's plan to rebalance our budget by 2015 -16. This has been a challenging but necessary task. This Budget demonstrates that Government will succeed in achieving that core objective.'
Restructuring, savings and efficiencies meant that Government was now 'leaner and better equipped to meet the needs of our people.'
Looking ahead to the 2016/17 financial year, the Treasury Minister announced his intention to increase personal income tax allowance to over £14,000 and lift more than 10,000 low-paid people out of the tax net.
The proposal, which will be subject to consultation, would also see further implification of the tax system through the abolition of the lower 10% band to leave a single income tax rate for individuals of 20% after allowances. Mr Teare said he hoped revenues would permit him to ensure that nobody would be worse off as a result of the change.
Key features of the 2015/16 Isle of Man Budget include:
- Government has achieved its aim of a rebalanced revenue budget, with provision for a £2m surplus.
- A reduction in gross spending in real terms (after inflation) by over £9m or 1%.
- Reintroduction of loan interest charged to Departments, to replenish the Capital Fund. Capital programme of £78m includes construction and engineering work worth £60m, £3m or 6% more than the previous year.
- £2m increase to the Health Inspection Fund to help fund additional resources and projects arising from reviews of Noble's Hospital.
- Creation of a £8.2m central contingency to offset unfunded inflationary and other contingency risk impacts to ease pressure on internal reserves.
- A substantial (82.7%) increase in the Carer's Allowance paid to those who cannot work because they are providing full-time care to a severely disabled person. This is going up from £61.35 to £112.10 per week and will benefit around 320 carers at an additional cost of about £850,000 a year.
- A new National Insurance 'holiday' scheme for employers taking on a person who has been long-term unemployed, long-term sick or recently released from prison.
- The 'tax cap', maximum individual income tax liability, to be increased from £120,000 to £125,000 for new entrants to the scheme. Mr Teare said the scheme would generate a direct economic benefit in the region of £125m over the next five years.
- An increase from 10% to 20% in the income tax rate paid by companies on income from local land and property, expected to raise an additional £3m per year
- Personal Allowance Credit to be reduced from £500 to £400 and to be restricted to the elderly or disabled with a taxable income of £9,500 or less. The Minister explained that PAC was still a potential disincentive to paid employment.
- Income thresholds for means-tested entitlement to child benefit to be reduced by £10,000, saving around £1m a year. Families with annual incomes under £50,000 will be entitled to full benefit; reduced benefit will be payable to those on between £50,000 and £80,000; and families with income above £80,000 a year will no longer be entitled to child benefit.
Summing up his Budget the Minister said:
'It honours the promise of this Government to balance the books; it continues to focus on fairness; it maintains funding for vital services for the Island's community, and particularly those who are vulnerable; it starts us on the path of building systems,finances and services for the next generation and not just for the next general election.'
Mr Teare told Members:
'This is a budget that firmly puts in place the structures to help us achieve long term affordability and sustainability in the public finances. We must continue to support the economy and more effectively deliver our services at no extra cost. We need a smaller, smarter government which gives the taxpayer better value for money.
'We will seek reform to drive down our long term liabilities, not least in terms of pension and welfare costs. Only then can we claim to be truly living within our means. I am confident that given what we have achieved so far, with closer working together, we will succeed.'
