• February 22, 2015


Behind the hype about an ‘adventurous’ 2015 Manx budget, ‘rebalancing’ and more support for ‘carers’ the budget in parts has a meaner streak.

We set out below the section on Personal Allowance Credit (PAC) which is to be cut by £100.

This payment goes to the lowest income group and effectively for some over recent years has been a financial lifeline coming as probably the largest lump sum they get in any twelve months.

The Treasury presentation is of course sugared with all kinds of reassuring caveats e.g. “this cannot be at the expense of the vulnerable” and paying benefits “to those who really need the support”. The Minister assures us that senior civil servants in Tax and Social Security will be working to ensure that 2015/16 will be the last year of PAC. It’s a pity they hadn’t started work earlier so we could see what the trade-off is going to be for this decision to rob the most vulnerable of much needed relief.

Extract from the budget speech below:

“Last year I indicated my desire to align the income tax allowances for all ages and therefore reduced the age allowance for those aged 65 or over. I remain convinced that this is the correct course of action and will remove the age allowance at the same time as the planned significant increase in the personal allowance in 2016/17. My second aim, to remove aspects of benefits from the tax system, such as personal allowance credits, is stated in the tax strategy. This cannot however be at the expense of the vulnerable. The Personal Allowance Credit or PAC, although refined in recent years, still acts as a potential disincentive to paid employment. It cannot be right that an individual working full time on the minimum wage does not qualify for a PAC but a working age individual with equivalent social security benefit income does.

The PAC was frozen last year at £500 for those with taxable income of £9,300 or less. For 2015/16 the PAC will be reduced to £400 and will only be paid to the elderly and disabled with taxable income of £9,500 or less. My ultimate aim remains that this will be one of the benefits eventually replaced in a new benefits system. All benefits need to be paid via the benefits system to ensure that we are making payments to those who really need the support. I will ask the Assessor of Income Tax to work with the Director of Social Security to put this in place for 2016/17 so that 2015/16 can be the last year of the PAC. For people who previously benefited from the PAC the Income Tax Division will endeavour to ensure that they claim any benefits to which they are entitled.”

It is particularly mean that the most vulnerable are having a benefit removed (cut substantially in real terms for its final year) and vagary surrounds what will replace it.

This Island really is a community which allows its government to pamper the rich and wealthy at the expense of the poor.

Monies saved from restricting the range of persons able to access PAC could have been used – if the Treasury Ministers word about ‘those who really need the support’ had a genuine ring – to increase PAC, but instead like all the other stealth charges, taxes and levies it will be used to fund grander government designs.

J B Moffatt (Mr)
Director of Information


(Please note that replies to correspondence received by the League and posted on CL News are usually scanned hard copies. Obviously every effort is made to ensure the scanning process is accurate but sometimes errors do occur.)


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