Increasing the island’s individual tax threshold to £20,000 would cost up to £63m a year, Treasury Minister Dr Alex Allinson has said.
The figure was provided in response to a question from Julie Edge MHK in the House of Keys.
By comparison, £63m is the cost of just over six weeks of government wages based on the 2024/25 wage bill of £526,964,000.
Costs
Dr Allinson stated that raising the allowance by £250 would reduce income tax revenue by an estimated £2.5m to £3m.
Julie Edge suggested such changes could also create wealth.
Dr Allinson acknowledged the intent to continue reviewing the allowance, stating it was to “benefit all workers on the Isle of Man in terms of putting money in their pocket, and therefore… trying to have a boost for our economy”.
How Reliable?
Chris Thomas also questions raised about the reliability of the Treasury’s tax forecasts.
Dr Allinson defended the estimates, saying: “I don’t think there is an underestimate from the Income Tax Division, there is a prudent forecast.”
He added that recent economic volatility has required the government to re-examine its forecasting models.