2008 BUDGET REPORT – A JOB WELL DONE
The 2008 Budget is being hailed as having minimal impact on ordinary islanders, with relatively modest duty increases and no extra taxes on domestic property. States finances are much better than anticipated and the future looks bright.
The 2008 Budget will have a very low impact on average islanders.Many will face an extra tax burden of just a few pence a week and even those in the ‘middle income’ bracket, who may have expected to shoulder a greater tax burden from 2008, have escaped relatively unscathed.
Only individuals with incomes higher than the 2007 Social Security upper earnings limit of £53,664 or those with mortgages of more than £400,000 should really notice the difference.
Tax on real property will be introduced next year as a more simple and transparent system. It is expected that 80% of homeowners will pay less or just a few pence a week more following the introduction of the new system.
The impact will be borne instead by businesses, particularly the regulated financial services sector, which will suffer an increase in property rates of 400%.
States revenues are predicted to be above previous forecasts for 2007 and 2008, especially in the key area of income tax ETI receipts.
Increases in the budgets of most departments are being held to RPI, though the priority areas of Health and Education are receiving more.
There will be no need to make a withdrawal from the contingency reserve fund in 2008, and the ‘grey hole’ expected for 2009 will be no more than £25m.
The buoyant financial position this year allows for an extra £12m. transfer to the capital reserve – £8.5m. was already committed – which will be earmarked for a major project. This should help to pay for a school or mental health wards, for example, over the life of the next House.
Treasury and Resources minister Deputy Lyndon Trott said:
‘The overall objective of the Fiscal and Economic Strategy – and the Budget – is to ensure that Guernsey remains a good place for businesses to operate and to provide well-paid jobs, therefore enabling wages to remain high and to increase.’
