Tynwald is being asked to approve an over-spend of almost forty seven million pounds this year by the Manx Government.
Figures released at 8am this morning (January 23), reveal a number of Departments have gone millions of pounds over budget for the financial year ending March 2024.
Four government departments overspend millions
The biggest overspend is by the Department of Health & Social Care (DHSC) who run Manx Care – Lawrie Hooper, the Minister of DHSC will be begging fellow Members to approve his bid for the extra £30 million.
The DHSC already had been awarded more money this year with a £20.5m increase and £8.5m from the National Insurance reserve fund.
Edge’s request is on top of the £11.5m increase the DESC was awarded in the budget.
Infrastructure Minister, Tim Crookall requires approval for the DOI’s £5,665,000, and the Deputy Chief Minister and Home Affairs Minister Jane Poole-Wilson’s Department has gone £2.2 Million over budget.
Treasury reserves
It will not be the individual government Ministers who will be appealing to fellow members to support their bids; the motion ‘to approve’ will be made by the Treasury Minister Dr Alex Allinson.
Each Minister will however be informing the Court about their Department’s financial position and the overspends.
The current economic situation has caused exceptional pressure on government departments, particularly around high inflation and pay awards in addition to their own specific issues. Despite remedial action being taken to minimise the impact, sustaining services vital to our community means extra funds will be required to cover expenditure
Dr Alex Allinson, Treasury Minister
The government overspend will have to be funded by another raid on the reserves after £152m was taken out to fund this years budget to start with.
The £1.2 billion budget exceeded
It was just under twelve months ago when Dr Allison announced that this current budget was being billed as the £1.2 billion budget.
We’re taking £152 million from reserves, to fund a £1.2 billion budget.
Dr Alex Allinson, Isle of Man Treasury Minister: Speaking in February 2023
Dr Allinson said at the time that “we have a strategy to start reducing that dependency on reserves that we relied upon during Covid to keep that economy going” – but it looks like this strategy has failed given the huge overspends by four Departments.
Dr Allinson said that Treasury has received regular updates throughout the year and will be working closely with the departments to ensure they continue to exercise strong financial management and control.
While the separate supplementary votes indicate funding must be found from outside the year’s annual Budget allocation, a favourable financial position means Treasury is able to avoid the need to draw further on reserves.
Dr Alex Allinson, Isle of Man Treasury Minister
The Treasury Minister claims that additional income tax revenue of around £48m is expected to be received in to the coffers, while expenditure from internal funds is lower by approximately £29m.
Allinson said that as a consequence, the amount drawn from reserves is forecast to be much lower than the planned £152.9m.
Income tax rates set for change?
The Treasury Minister will be presenting his budget to Tynwald next month and there has been widespread speculation that the Income Tax rates may change.
So far the Minister has remained tight lipped about any such proposals, but if the tax rates are to change it will signify a seismic shift in the Isle of Man’s taxation policy and any moves to adjust tax rates will destabilise the Island’s reputation as a low tax jurisdiction.
Changing the income tax rates are likely to impact the working class the most and be seen as another raid on the ever squeezed working population, in particular homeowners.
This is the section of community who suffered the most from cost of living increases and stealth taxes, rates and other charges.
Corporation tax and the zero/ten regime is why the Island has attracted so many businesses to domicile on Manx soil.
Business experts on the Island say that any attempt to move away from this policy could have catastrophic consequences for the Manx exchequer and economy, not to mention the Island’s reputation as a friendly business centre.
Tynwald will meet on Tuesday, February 20 and can sit for three days.
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