Budget Report 2009
INCREASED tax allowances for all will offset duty increases proposed in the 2009 Budget, released today [Friday 7 November] by the Treasury and Resources Department.
Minister Deputy Charles Parkinson, presenting his first Budget, said that its theme was ‘measured consolidation’ in ‘a time of great challenge for Guernsey’.
He said: ‘This Budget has been prepared on the basis of maintaining the real value of taxes and other income sources, in order to fund the existing level of public services and some essential service expansions.
‘The Budget was prepared against a backdrop of uncertainty, both in terms of the implementation of the Zero-10 regime and of economic turmoil.
‘We remain consistent in our approach that in order to raise revenue to pay for services the public wants, it is right to use existing taxes and target the beneficiaries of the Zero-10 reforms.’
Duty rises are proposed for tobacco (8.5% (21p a packet) in line with States’ instructions); alcohol (5.5%, less than 2p on a pint and 7p on a bottle of wine) and 2p a litre on motor fuel. It is proposed to increase property taxes, where domestic householders would see a 5.5% increase in their TRP charges, with 25% proposed for offices and a 50% increase for the financial services industry.
The indirect taxation increases are expected to raise an extra £3.5m. for the States.
The Treasury and Resources Department has made the exceptional move of increasing personal income tax allowances by RPI for next year – taking personal allowances for a single person to £8,700 – costing the States £4m. This reverses the decision taken in the 2008 Budget to freeze personal allowances for 2009.
It is also proposing a 4% increase for 2010, which would cost the exchequer a further £3m.
Deputy Parkinson said:
‘My Department is strongly of the view that the value of the personal income tax allowances should be maintained in real terms, at least until our joint review with the Social Security Department, of a possible system of tax credits is completed.’
The Budget indicates that a drawdown of £8m. will be required from the Contingency Reserve in 2009.
For 2008, States income is up more than £20m., mainly due to one-off receipts of tax from companies in respect of income arising prior to 2008.
The States continue to provide monies as a priority to support essential infrastructure development. £50m. will have been added to the Capital Reserve during 2008 and a further £20m. is proposed for transfer on 1 January 2009.
He said: ‘This Budget has been prepared on the basis of maintaining the real value of taxes and other income sources, in order to fund the existing level of public services and some essential service expansions.
‘The Budget was prepared against a backdrop of uncertainty, both in terms of the implementation of the Zero-10 regime and of economic turmoil.
‘We remain consistent in our approach that in order to raise revenue to pay for services the public wants, it is right to use existing taxes and target the beneficiaries of the Zero-10 reforms.’
Duty rises are proposed for tobacco (8.5% (21p a packet) in line with States’ instructions); alcohol (5.5%, less than 2p on a pint and 7p on a bottle of wine) and 2p a litre on motor fuel. It is proposed to increase property taxes, where domestic householders would see a 5.5% increase in their TRP charges, with 25% proposed for offices and a 50% increase for the financial services industry.
The indirect taxation increases are expected to raise an extra £3.5m. for the States.
The Treasury and Resources Department has made the exceptional move of increasing personal income tax allowances by RPI for next year – taking personal allowances for a single person to £8,700 – costing the States £4m. This reverses the decision taken in the 2008 Budget to freeze personal allowances for 2009.
It is also proposing a 4% increase for 2010, which would cost the exchequer a further £3m.
Deputy Parkinson said:
‘My Department is strongly of the view that the value of the personal income tax allowances should be maintained in real terms, at least until our joint review with the Social Security Department, of a possible system of tax credits is completed.’
The Budget indicates that a drawdown of £8m. will be required from the Contingency Reserve in 2009.
For 2008, States income is up more than £20m., mainly due to one-off receipts of tax from companies in respect of income arising prior to 2008.
The States continue to provide monies as a priority to support essential infrastructure development. £50m. will have been added to the Capital Reserve during 2008 and a further £20m. is proposed for transfer on 1 January 2009.