THE local branch of the Institute of Directors has commented on how the UK Budget could impact on the Island.
Sally Bolton, chair of the Isle of Man branch, said: "The moves announced by George Osborne at Westminster will have an effect upon us here in the Isle of Man. Most significant of course is the proposed increase in VAT to 20 per cent from January 4 2011.
"This will not only affect shoppers but it will have a significant impact upon inward revenues for government, possibly as much as ?25 million in a full year. We will be looking further into the local impact as more detail comes out.
"Certainly the freeze on public sector pay increases for those earning above ?21,000 per annum is a clear indication to the Isle of Man Government on how some costs need to be managed.
"The plan to cut most UK government department budgets by 25 per cent is another demonstration of the bold steps required. Of course the coalition has just won an election whereas the Isle of Man has its election next year. We hope that this will not deter those in positions of authority following the bold steps of their UK counterparts."
In the UK the IoD described the budget as bold and decisive and the right medicine for the economy.
IoD director-general Miles Templeman said: "George Osborne has faced up to the challenge. The economy needed faster and deeper deficit reduction and that’s exactly what the Chancellor has delivered.
"Equally important to the scale of deficit reduction is the way it is done. Here again the Chancellor has chosen the right route, by concentrating overwhelmingly on closing the fiscal gap by lower spending instead of higher taxation.
"We do not believe the Budget will threaten economic recovery. Quite the contrary, it is likely to improve the economic outlook by showing the public finances are finally being brought under control."
With regard to specific tax measures in the UK Budget the IoD said: 'We welcome the package to neutralise the damaging effect of the national insurance increase, through an increase in the level of income at which employers’ contributions start to be payable and an increase in the personal allowance. We also welcome the decision to review IR35 and the taxation of small businesses.
"With regard to specific spending measures we recognise the need for bold action to freeze public sector pay for two years and we welcome the urgency to fast-track public sector pensions reform."
