'Giveaway budget' divides political opinion

A £2,250 increase in personal allowances on the Isle of Man has been praised for "putting money into people's pockets" by some politicians but branded a "reckless giveaway" by others.

Delivering the 2026-27 budget, the recently appointed Treasury Minister Chris Thomas announced the figure would rise to £17,000 for individuals and £34,000 for couples.

He said the measure, which would cost £25m each year, would "make many taxpayers nearly £500 better off a year".

However, the move was criticised by a number of MHKs for creating a "hole" in government revenue and increasing reliance on the reserves.

The budget included a £126m draw down from the reserves, which currently stand at £1.95bn.

Critics of the measures included Lawrie Hooper, who said a budget that was "built on unfunded tax cuts" which would drain the reserves was "mortgaging our future to try and win the next election".

He said the budget measures were "selling future generations down the road so the government can raid the reserves" amounting to "daylight robbery of public funds".

Similar concerns were echoed by a number of other MHKs, with Michelle Haywood describing it as a "reckless giveaway budget".

The personal allowance rise as a "recurring hole in government revenue", she added.

Alex Allinson - who was replaced as treasury minister by Thomas in January - had planned a £750 increase in the personal allowance before being sacked.

He said: "While I welcome a further increase in the personal allowance, the size and cost of this funded from an increased structural deficit is difficult to justify."

Described as a "populist" measure by a number of MHKs, some said that it created a blanket increase instead of providing targeted support for those who needed it the most.

Among those was Julie Edge, who questioned whether the government breakdown of £18,280 in spending per person outlined in the budget would be considered by taxpayers as "value for money".

However, Enterprise Minister Tim Johnston said the budget was not "spending for spending's sake" but rather a "strategic investment that strengthens the fabric of our towns and communities".

Chief Minister Alfred Cannan said also praised the budget, in particular the rise to personal allowance along with a 4.8% uplift in National Insurance thresholds.

"If you invest in people, if you cut taxes, if you put money back into working people and families, you increase the value of the economy," he said.

However, he said that while "no one can criticise this administration for not supporting healthcare," the ability for it to remain within budget "remains a real concern."

Among the spending outlined for the year ahead was a £45m rise in healthcare funding, which would mean expenditure for the health department would had increased from £270m at the start of the administration in 2021-22 to more than £400m in 2026-27.

John Wannenburgh said the island was "becoming conditioned on our reliance on reserves" and the "prolonged and habitual use must be ended".

The record rise in healthcare spending would "simply bankrupt the island", he added.

But Health and Social Care Minister Claire Christian said the budget was about "putting healthcare funding on a firmer financial footing" and ensuring it was "clinically robust, financially sustainable and able to meet the needs of our community in the long-term".

Responding to the comments, Thomas said the budget "balances investment with discipline, supports those who need it, and encourages everyone".

He said it laid out a "clear plan for a more resilient future", adding: "I genuinely believe we are getting a hold of healthcare expenditure."

The rise in the personal allowance, which had fallen behind inflation, was intended to be universal and "not about only focusing on a group of people", he said.

Changes to the structural deficit - the amount of revenue spending taken from reserves each year - were not due to the personal allowance rise, but were instead down to other expenditure, particularly an increase in cost pressures faced by Manx Care, he added.

Tynwald members voted in favour of the budget, with 16 for and 8 against in the House of Keys, and five for and two against in Legislative Council.

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