Treasury Minister Allan Bell has delivered what he described as 'a balanced budget for challenging times'.

But, despite the harsh economic climate, he resisted any temptation to raise tax and left the standard rate at 10% and the higher rate at 18%.

The budget shows a net spending increase of ?5.6 million, or 1% over the current year's estimate, and a ?127 million capital investment programme.

Mr Bell told Tynwald he was keen to help those low incomes, but said there was a limit to what he could do:

For those people in our community who are less well off, I can offer some additional help this year, through the only changes I am announcing which are, indeed, the only changes I feel the Isle of Man can afford to make at this time.

"Firstly I will be increasing the amount of the personal allowance tax credit by 10%, from ?500 to ?550. The limit, below which the credit will be payable, will also be increased to ?9,200 to match the personal allowance.

Mr Bell said the cost of that measure would be ?1 million.

The only department to see an increase in spending is the DHSS which is to receive an extra ?13.3 million.

Mr Bell said the next year was going to be very tight and a long way removed from recent years, which have seen surpluses of millions of pounds.

He told Tynwald:

"For next year I am estimating income to be ?572 million and have budgeted expenditure at the same level. There is just a ?200,000 surplus on this budget, and therefore all departments will have to manage carefully and cautiously in the year ahead.

"To achieve a balanced budget many difficult decisions have had to be made. These include utilising the interest earned on the reserve fund and currency account to support ongoing spending, rather than reinvesting them."

Despite the current downturn in the economy, Mr Bell said the Island remained wealthy by many countries' standards and would be giving more to those less fortunate:

"In spite of the challenges facing us, the Isle of Man remains a prosperous community (and) I believe we have a responsibility to help those in the developing world.

"The overseas aid budget has grown substantially since I became treasury minister, and for 2009/2010 it will be increased by a further ?200,000 to ?2.4 million, an increase of 9%."