Monday 03 October 2016
Progressive changes to the tax system, including an above-inflation increase to personal income tax allowances for low and middle earners, headline the 2017 Budget.
In a Budget described by Deputy Gavin St Pier, President of the Policy & Resources Committee, as responsible, fair, progressive and realistic, measures proposed include:
- Personal income tax allowances increased to £10,000
- The gradual withdrawal of personal income tax allowances for high earners, at a rate of £1 for every £3 that a person's income exceeds £138,684 a year
- reform of the document duty regime, which will reduce the tax paid when buying a property for less than £800,000
Deputy St Pier said:
"Preparing the 2017 Budget in the context of the revenue shortfalls experienced in 2015 and 2016 has been challenging. It is therefore particularly pleasing that it has been possible to produce not only a balanced budget, but one which is also simultaneously responsible, fair, progressive and realistic."
The Policy & Resources Committee is committed to eliminating the deficit in the short term and returning public finances to a surplus in the medium term.
In order to achieve a balanced budget in 2017, the burden has been shared fairly in a ratio of 2:1 between a reduction in the size of the public sector and revenue raising measures. The budget for public expenditure has been reduced by some £10m, while tax and duty increases will generate £5.4m.
Deputy St Pier said the proposed changes to the document duty system had been calculated as being revenue neutral for government, but would provide a stimulus to the lower and middle sections of the housing market and further encourage the recovery currently being experienced.
"Those benefitting most from this revision would be conveyances at or around the value of average house prices - for example someone buying at the median value of £435,000 would pay £1,950 less in document duty (£11,100 compared to £13,050)," he said.
2017 Budget at a glance:
- The withdrawal of Personal Income Tax Allowances for higher earners (£2.4million)
- A real-terms' increase in Personal Income Tax Allowances (cost of £1.1million)
- Domestic Tax on Real Property and land rates to increase by 10.5% (£0.6million bringing the total to £6.4million)
- Commercial Tax on Real Property to increase by 5% (£0.7million bringing the total to £15.1 million)
- A 5.6% increase in the duty on cigarettes (8.1% for all other tobacco products) (£0.3million)
- A 2% real-terms' increase in the duty on alcohol (£0.6million)
- A 5p increase in the duty on a litre of fuel (£1.4million)
You can find a link to the full budget report in useful pages titled 'States Meeting 1st November (XXVI)' and a one page version in the downloads section on this page.
