Treasury Minister Chris Thomas has explained how he overhauled the budget within 48 hours of his appointment.
This included scrapping a planned National Insurance Youth Initiative and replacing it with an increased personal tax allowance.
Mr Thomas was appointed on January 20 and set about changing the previous administration’s plans.
“We substituted a sort of complicated package of things like an NI youth initiative with personal tax allowance,” he told the Public Accounts Committee.
Changes
The changes focused on two key areas: slowing the minimum wage increase and introducing a £2,250 rise in the personal tax allowance, taking approximately 3,600 people out of the tax net.
Chief Financial Officer Caldric Randall confirmed that removing the NI youth initiative improved the structural deficit position, as the original proposal “would have been income foregone”.
“We got rid of an untargeted, generalised National Insurance youth initiative that was going to make the structural deficit worse,” Mr Thomas said.
“We replace them with a generalised personal tax allowance.”
Mr Thomas stressed the core six-month budget process was not “torn up”, adding: “We weren’t going back to revisit capital bids process. We weren’t going back to revisit the revenue bid process.”
The minister defended the speed of the process, saying Treasury exceeded his expectations in delivering costed options within 24 hours.
Five of six Public Accounts Committee members voted against the final budget, though it passed the House of Keys and Legislative Council.