Treasury Minister Dr Alex Allinson says it is unlikely that work on a new health levy will be ready by February.
The 10% tax hike on the upper rate which sees most islanders paying the higher 22% tax was announced as a temporary measure in this year’s Budget to plug gaps in the health and social care budget.
Asked by former health minister Lawrie Hooper when the levy will be ready, Dr Allinson said it is “unlikely that it would be possible to replace last year’s change in the high rate of income tax with an NHS levy as part of the budget for next year, as announced in February”.
He added: “As Treasury has continued to investigate bringing forward a new NHS levy this year, it has become apparent that it is more complicated than initially thought. An NHS levy would effectively be a new tax.
“It’s imperative that we work carefully to ensure that any changes to the taxation system are properly considered, any impacts are correctly calculated, and that such changes help towards providing the revenue that health and social care requires both now and in the future.”
Time and Intentions
Dr Allinson would not give a timeframe on the levy, but said it would be as soon as the Treasury was able to finalise its plans and submit them to a public consultation.
Following a question from Jason Moorhouse (Arbory, Castletown and Malew), Dr Allinson said there are “no intentions” to further increase income tax, despite the continued financial difficulties Manx Care faces, even with its much increased budget.
Permanent?
Mr Hooper was unimpressed and asked his former CoMin colleague: “Is he now standing here admitting to the Manx public that the Treasury have made no progress whatsoever in developing an NHS Levy, and there is no chance of that coming forward before the February 2025 budget, which means this temporary one year income tax increase is now going to become a permanent 2% increase because Treasury are never going to get around to doing the work needed on an NHS Levy?”
He added: “They haven’t been able to do it in a year. Are they going to do it in another year? Another two years? How long is this work going to take?”
Dr Allinson said he could understand the frustration around this, but somewhat confusingly said he intends to bring it forward for the “2025/26 tax year”, which would suggest it will be coming to Tynwald early next year, if not in time for the new Budget in February.
He also refuted a claim by Onchan MHK Rob Callister that the extra cash raised from the tax increase went straight out in pay increases.
Manx Care has previously said pay rises over the last three years have cost a total of £30m.
Also Relevant
Mr Hooper will bring a motion to December’s sitting of Tywnald asking for members’ support in telling the Treasury to reverse its tax increase, which would in-effect bind the hands of Dr Allinson if it was to prove successful.
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