2016
By MALCOLM CHAMBERS (B.A. CPFA),
Chambers Accounting Ltd “The long-term Budget” Budget
Published in early October, and still subject to States debate as I write this, the 2016 Budget is described in the Treasury Minister’s foreword as a long-term Budget which protects taxpayers with relatively neutral measures, and aims to maintain tax revenues with modest growth. In fact the annual growth forecasts for tax revenues, being income tax and impôts proposals, are:
2016
Tax assessments Impôts duties Total
2017 2018
3,705,000 4,800,000 5,845,000 1,848,000 1,976,000 1,885,000 5,553,000 6,776,000 7,730,000
Although these figures appear significant, with States tax revenues in excess of £620 million they only represent increases of less than 1% a year. On the face of it, with an inflation rate also of less than 1%, the increases should maintain the value of tax revenues, but the bottom line is can the States keep expenditure increases to less than 1%?
Unless you smoke, the proposed duty increases on fuel, drink and tobacco are relatively small, for example the 1p increase per litre of fuel would only increase average motoring costs by about £6 a year. A modest drinker would pay an extra £10 a year, but the average smoker can expect to pay over £120 extra a year. There are also changes to Vehicle Emissions Duty and Stamp Duty which will increase the cost of buying your car and reduce house purchase costs, but these are hardly likely to make a difference to your decision to make these major purchases. The good news is that GST remains at 5%.
The standard and marginal rates of tax are maintained at 20% and 26% respectively, and the income tax
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measures proposed are mainly targeted ones, aimed at removing differentials and perceived inequalities within the tax system. For the higher earning standard taxpayers this budget has no impact, except for those with children. Over the next three years, they will lose relief for children and the additional personal allowance for single parents. They keep the higher allowance for a child in further education, but for how long one must ask. These allowances will remain available for marginal rate taxpayers.
All the other tax proposals affect marginal rate taxpayers only, who currently represent over 80% of all taxpayers, but the effects will not be universal. For those aged under 65, the 0.9% increase in the exemption threshold in theory reduces the tax bill of a single person by £39 and a married couple by £52. In reality, if their wages
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