Isle of Man welcomes UK VAT rise
The Isle of Man's Treasury Minister has given a cautious welcome to the UK Budget's 20% rise in VAT.
Anne Craine MHK said that the increase will bring in an extra £25m a year to the island, but that it will "impact [on] vulnerable groups".
She warned that despite the additional revenue there would still need to be public spending cuts to re-balance the island's Budget.
Manx officials are examining all Budget details to work out their implications.
Ms Craine said "Clearly the rise in VAT to 20% from January 2011 will be the main topic of conversation locally.
"In one sense the extra revenue this will bring in, around £25 million per year, will be welcome, and will help us meet the Budget shortfalls currently being projected over the next few years."
"However, at the same time we need to acknowledge the impact that this will have on vulnerable groups within society, the implications for local business."
"The increase in the rate of VAT will give us greater budgetary flexibility, but we still need to deliver the planned spending reductions in order to achieve the overall re-balancing of our budget in the years ahead."
The UK VAT-sharing agreement introduced in April, where the UK government kept back a proportion of VAT revenue, meant that the island lost £50m this year and will lose £100m from April 2011.
Ms Craine said that her team would be evaluating the Budget, including proposals for welfare reform, corporation and capital gains tax, air passenger duty and national insurance.