Politicians agree to keep 2% tax rise under review

The island's higher rate of income tax rose from 20% to 22% in April

A 2% rise in the higher rate of personal income tax will not be reversed but should remain under review, Manx politicians have agreed.

Treasury Minister Alex Allinson introduced the increase in April to generate a £20m boost for health, as demands and costs surged.

In Tynwald's December sitting, former health minister Lawrie Hooper called for the rate to revert to 20% in the 2025 budget as the rise had been billed as "temporary".

But members instead backed Allison's amendment to continue reviews in line with the taxation strategy, as he said a reduction could result in some services being cut.

During his budget speech in February, the treasury minister said it had been his ambition the increase would only be in place until a health service levy had been "investigated and introduced".

In a update in November, he confirmed it was "unlikely" the levy would be introduced next year as it has been "more complicated" than expected to implement.

Stable finances

Hooper questioned if a "potentially unpopular tax" would then be brought forward in an election year in 2026.

He also went on to tell members he feared the 22% rate of would become the "new normal" and over time would "simply be accepted as being the higher rate of tax".

Allinson said supporting Hooper's move would be "irresponsible" and argued politicians sometimes had to "make hard decisions that are not always popular" as the delivery of services required "fiscal stability".

He said: "I fully appreciate our residents would fully welcome a reduction in the higher rate of income tax, but what services would they welcome being cut?"

He added it was "essential" to the island's reputation domestically and internationally that "finances are stable, sustainable and based on credible policies".

Allinson's amendment was carried with 17 votes in favour, and 10 against.