Local campaigner Alf Caine has sent an open letter to Members of Tynwald on what he sees as workers and businesses being squeezed to breaking point.
The open letter:
The Isle of Man is at a critical moment.
A new Treasury Minister takes office during a period of real economic pressure and limited fiscal headroom. I wish him well in the role. A Budget is due in February, and the Chief Minister has publicly acknowledged that government must change direction if it is to leave a positive legacy. With a general election scheduled for September 2026, this administration has a short and narrowing window to demonstrate that it is prepared to act in the interests of the Manx public.
That window has been a long time opening. Many of the pressures now being acknowledged have been evident since shortly after the September 2021 election. For those operating in the private sector, it feels as though it has taken over four years for these concerns to be fully recognised, at the point when time for meaningful delivery is now extremely limited.
The position is clear and widely understood. The cost of living is high. The cost of doing business continues to rise. The combined burden of wages, taxation, National Insurance and regulation is pushing increasing numbers of small businesses to the edge.
Island Economy
As the Chief Minister has confirmed, public sector earnings now sit at around 28 percent above average private sector earnings. In a small, high-cost island economy this matters. It skews wage data, distorts minimum wage calculations and places unsustainable pressure on the private sector, the sector that ultimately funds public services.
Small businesses are not failing loudly; they are failing quietly. Owners cut hours, absorb losses, prioritise staff pay over their own and eventually conclude that continuing is no longer viable. These closures rarely attract attention, but their cumulative effect on communities, competition and living costs is severe.
At the same time, low-paid workers and pensioners are being drawn into the tax system despite earning less than the living wage. Many are paying income tax while struggling to meet basic living costs. This is neither fair nor economically rational.
Government frequently refers to supporting small business, yet much of that support is circular and uneven. Money taken through taxation and National Insurance is partially returned through grants and short-term schemes to some businesses, while others receive nothing. This approach is costly to administer, inefficient and ineffective.
Supporting Enterprise
If government is serious about supporting enterprise, protecting jobs and reducing hardship, it must stop taxing low-paid work and stop taxing job creation at the bottom end of the economy.
There is a clear and credible alternative:
- Raise the personal allowance to £20,000 to reflect the impact of inflation during this administration, alongside increasing the employee National Insurance threshold.
- Remove workers earning below the living wage from income tax and National Insurance entirely, and remove pensioners below the living wage from income tax.
- Introduce a tapered personal allowance so support is focused where it is genuinely needed.
- Reduce employer National Insurance on earnings up to the living wage, allowing businesses to pay higher wages without increasing costs.
This would increase take-home pay without fuelling inflation, improve business survival, reduce reliance on benefits and subsidies, keep money circulating in the local economy and broaden the tax base through growth rather than hardship. It would also reduce the need for ongoing government support schemes by addressing root causes rather than symptoms.
Tax Reform
Alongside tax reform, government must demonstrate leadership by examining its own cost base. If the private sector is expected to absorb rising costs and uncertainty, the public sector cannot remain insulated from the same realities.
With an election approaching, the Manx public will judge this administration not on statements or intentions, but on whether it used the limited time available to deliver meaningful, structural reform.
This is not ideology. It is a practical response to the lived experience of people across the Isle of Man.
The Manx public deserves an economy that rewards work, sustains enterprise and allows people to live with dignity, not one that quietly pushes businesses to close and workers into hardship.
Government must now listen, engage and act.