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PA Media
Tuesday's budget included a £2,250 rise in the personal allowance
Manx Businesses and pressure groups have welcomed what is the largest single rise in tax-free take home pay for workers, following the announcement of the budget.
Outlined by newly-appointed Treasury Minister Chris Thomas, workers will now be able to earn £17,000 tax-free - a rise of £2,250.
The hike in personal tax allowance, which will cost £25m, partly compensates workers for a reduction in a proposed minimum wage rise to 5% following heavy criticism by businesses and pressure groups of the originally planned 9.9% hike.
Chairman of the Local Economy Forum (LEF), Chris Robertshaw said the increase in personal allowance was "totally positive".
The LEF campaigns on the interests of the Isle of Man's businesses and had warned against the now-shelved 9.9% minimum wage rise amid fears businesses would not be able to absorb such a hike overnight.
Chris Robertshaw was MHK for Douglas East between 2010 and 2021
The new tax allowance, which doubles to £34,000 for couples, was three times that originally planned in the budget before Thomas's appointment.
The rise will equate to a take-home pay similar to what a 9.9% minimum wage rise would have seen.
Robertshaw said: "We simply couldn't suppress the personal tax allowance any longer - it needed to go up in line with inflation.
"The amount of tax over the last five years has shot up yet in no way has that resulted in reducing the deficit."
He argued the general public, not central government, was best placed to reinvest and revive the economy as a direct result of having more take-home pay than before.
"It's a totally positive situation. Today we've seen a solid step forward, seeing the treasury minister throw down the gauntlet.
"We were going in the wrong direction before, with high taxation harming the wellbeing of the economy".
The timing of such fiscal changes has previously come under scrutiny, with the rise planned to take effect on 1 April - five months before the island's general election.
"It's late in the day," Robertshaw said, "but it's a very positive change and definitely enjoys the support of the local economy and taxpayers generally."
Despite the LEF's praise, the move has been criticised by some MHKs for its cost to the island's reserves.
Crossroads Care chief executive, Jackie Betteridge, was pleased by the budget
The LFE's fears about the now scrapped near 10% minimum wage rise were echoed by the care sector on the island, including Crossroads Care - which has 500 islanders under its jurisdiction and over 120 staff members.
Chief executive Jackie Betteridge said: "The minimum wage is something very close to our heart, we pay our staff the going wage but it has a knock on effect."
She added if her company were to give a pay rise to a staff member who also receives a carers allowances, they in turn would have to work fewer hours as they would go over the £210 weekly earnings limit to qualify for the payment.
"I don't see how that helps the economy, it's not one size fits all," she said.
Betteridge said, as a third sector organisation, the prospect of dealing with a tall wage rise and incorporating mandatory rises across the board for staff has been "worrying".
Welcoming the overall benefits of the personal allowance rise, she said: "More people will have more money to spend how they need."
"We haven't reached a panacea, but it's better than it was."
Along with the personal allowance rise, Thomas also announced an inflationary rises in many benefits, including carers allowance.
Betteridge said that continued to acknowledge that "carers are real, they really are the backbone of the island's care system".
