BUDGET 2010: SUMMARY

• GOVERNMENT FINANCES YEAR TO MARCH 2010: “ A RECORD SURPLUS”

- GOVERNMENT BUDGET SURPLUS: £29.7 MILLION (A RECORD HIGH)

- REPRESENTS CUSHION OF NEARLY 10% OVER EXPENDITURE.

- OVERALL RECURRENT REVENUE: £ 334 MILLION (UP £27.7 MILLION OR 9%)

- OVERALL RECURRENT EXPENDITURE: £304.5 MILLION (UP £18 MILLION OR 6.3%)

• ECONOMIC GROWTH

- ECONOMY (GDP) GREW 5.5% LAST YEAR: £ 869 MILLION AT MARCH 2009

- ESTIMATED GREW ANOTHER 5% to £914 MILLION TO MARCH 2010

• EMPLOYMENT

- 20,450 JOBS IN ECONOMY.

- ONLY 59 JOBS DOWN IN 2009 FROM RECORD, DESPITE INTERNATIONAL CRISIS

- RECORD NUMBER OF GIBRALTARIANS IN JOBS

• CAPITAL PROJECTS INVESTMENT

- £106 MILLION INVESTED IN YEAR TO MARCH 2010

- £150 MILLION ESTIMATED FOR THIS YEAR

- MAIN PROJECTS IN PROGRESS:

o NEW PRISON

o NEW LAW COURTS

o NEW GOVERNMENT RENTAL HOUSING ESTATE

o REPAIRS TO MONTAGU ESTATES

o BUILDING HOUSING FOR ELDERLY (ALBERT RISSO HOUSE)

o BUILDING AFFORDABLE HOMES ( EX OEM PROJECTS)

o NEW AIR TERMINAL AND OTHER AIRFIELD INFRASTRUCTURE WORKS

o TRAFALGAR INTERCHANGE

o DUALLING OF DEVIL’S TOWER ROAD

o NEW ROAD TO FRONTIER

o TUNNEL UNDER RUNWAY

o MULTI STOREY CAR PARK AT DEVIL’S TOWER ROAD

o REBUILDING WESTSIDE REVETMENT AND PROMENADE

o NEW WOMEN’S HOSTEL

o DUDLEY WARD TUNNEL ACCESS PROTECTION WORKS

o EUROPA POINT LEISURE ZONE & BEAUTIFICATION

o RELOCATIONS

o PUBLIC MARKET

- MAIN NEW PROJECTS THIS YEAR:

o ROSIA/QUEENSWAY LINK ROAD

o EUROPORT/COALING ISLAND LINK ROAD

o REFURBISHMENT OF EXISTING PLAYGROUNDS

o NEW PLAYGROUNDS AND GREEN AREAS

o NEW OLD PEOPLES’ HOME AT OLD HOSPITAL

o NEW SCHOOL AT OLD HOSPITAL

o DEMENTIA HOME AT NAVAL HOSPITAL

o NEW MENTAL HEALTH HOSPITAL AT NAVAL HOSPITAL

o CANCER RELIEF CENTRE AT EX BFBS BUILDING

o NEW BUS SHELTERS

o NEW URBAN PUBLIC TOILETS

o TAKE AND RIDE BICYCLES SCHEME

o MORE MULTI STOREY CAR PARKS

o ESSENTIAL SEWAGE & ELECTRICITY INFRASTRUCTURE

• GOVERNMENT RESERVES AND DEBT

- NET PUBLIC DEBT ( GROSS GOVERNMENT BORROWINGS MINUS GOVERNMENT’S CASH RESERVES): £139 MILLION AS AT 31.3.10

- REPRESENTS ONLY 15% OF GDP

- EXPECTED TO JUST 19% of GDP THIS YEAR TO FUND INVESTMENT

• NEW BANK NOTES

- GOVERNMENT TO SHORTLY LAUNCH NEW £5, £10,£20, £50 AND £100 NOTES

• POSSIBLE NEW BANK

- GOVERMENT TO TRY AND PROMOTE NEW LOCALLY OWNED AND MANAGED RETAIL/COMMERCIAL BANK T0 PROVIDE MORE RESILIENCE IN LOCAL MORTGAGE AND BUSINESS LENDING

• BUILDING MORE OFFICE SPACE

- GOVERNMENT TO CO- DEVELOPE PHASE 1 OF MIDTOWN OFFICES TO ENSURE THAT LACK OF BANK FUNDING FOR PRIVATE DEVELOPERS DOES NOT STARVE GIBRALTAR OF MUCH NEEDED OFFICE SPACE TO MEET GROWTH PROSPECTS

• SUPPORT FOR CONSTRUCTION INDUSTRY

- OUTLINE OF SUPPORT SCHEME ANNOUNCED.

- DETAILS AND IMPLEMENTATION DURING JULY/AUGUST

• CLIMATE OF COMPLIANCE

- OUTLINE ANNOUNCED OF APPROACH TO CREATE CLIMATE OF COMPLIANCE IN TAX, EMPLOYMENT AND FAIR CROSS BORDER TRADE

- DETAILS IN SEPTEMBER IN CONJUNCTION WITH BUSINESS AND LABOUR REPS.

• PUBLIC SECTOR

- THERE WILL BE NO PAY FREEZES IN GIBRALTAR PUBLIC SECTOR

- WIDE RANGING REFORM AND MODERNISATION NEGOTIATIONS GOING WELL

• COMPANY TAX

- 10% RATE FROM 1.1.11 FORMALLY ANNOUNCED. 20% FOR UTILITY COMPANIES.

- PARTIALCLAWBACK FROM COMPANIES TO RECOUP SOME OF THE LOST REVENUE BY INCREASING:

o EMPLOYERS’ SOCIAL INSURANCE CONTRIBUTIONS BY 10%

o COMMERCIAL RATES BY 12%

o COMMERCIAL SALT WATER RATES BY 1 PENCE

o HALVING RATES EARLY PAYMENT DISCOUNT TO 5% (10% FOR SHOPS,WHOLESALE,BARS & RESTAURANTS)

o COMMERCIAL ELECTRICITY UNIT OF CONSUMPTION TARIFF BY 10%

• PERSONAL TAX

- EFFECTIVE TAX RATE LOWERED IN ALL INCOME BANDS

- 2.8% INCREASE IN ALLOWANCES IN ALLOWANCE BASED SYSTEM

- NO INCOME TAX AT ALL IF INCOME IS BELOW £8000 PER YEAR UNDER THE GROSS INCOMES BASED SYSTEM:

- ON INCOMES BETWEEN £8,000 AND £16,000 PER ANNUM, TAX ON FIRST £10,000 LOWERED FROM 10% TO 8%, DELIVERING TAX CUT RANGING FROM 20% TO 9% (3900 BENEFICIARIES).

- THE EFFECTIVE TAX RATE ON LOW INCOME EARNERS (£8,000 TO £16,000) THUS LOWERED TO MAXIMUM OF 12.5% (RANGES FROM 8% TO 12.5%)

- ON INCOMES BETWEEN £16,000 AND £25,000 THERE WILL BE AN EXTRA £1000 OF TAX FREE INCOME, RESULTING IN A REDUCTION IN THE MAXIMUM EFFECTIVE TAX RATE TO 18.5% ( RANGING FROM 12.5% TO 18.5%) (4300 BENEFICIARIES).

- ON INCOMES BETWEEN £25,000 AND £35,000 THE MAXIMUM EFFECTIVE RATE OF TAX IS REDUCED BY UP T0 2.6% FROM A RANGE 19.2% TO 22.6% TO A RANGE OF 18.5% TO 20%, DELIVERING TAX CUTS RANGING FROM £200 TO £900.

- ON INCOMES BETWEEN £35,000 AND £100,000 THE EFFECTIVE RATE OF TAX, WHICH CURRENTLY RANGES FROM 22.6% TO 26.75% IS REDUCED BY UPTO 2.6% TO A NEW RANGE OF 20% TO 26.25%, DELIVERING TAX SAVINGS OF BETWEEN £200 AND £900.

- THE TOP RATE OF TAX, CURRENTLY 35% IS ABOLISHED. THE TOP RATE IS NOW 29%

- FOR INCOMES ABOVE £353,000 A YEAR, THE TAX RATES FALL AS FOLLOWS, DELIVERING TAX SAVINGS OF BETWEEN £200 AND £900.

- FOR INCOMES ABOVE £353,000 A YEAR, THE TAX RATES FALL AS FOLLOWS:

o £353,001 TO £704.800 AT 20%

o £704.801 TO £1 MILLION AT 10%

o EXCESS OVER £1 MILLION AT 5%

OTHER PERSONAL TAX MEASURES:

- WITH EFFECT FROM 1 JULY 2009 TAX RELIEF ON RETIREMENT ANNUITY CONTRACTS AND PERSONAL PENSION SCHEMES WILL BE LIMITED TO THE LESSER OF 20% OF EARNED INCOME OR £35,000

- CATEGORY 2 INDIVIDUALS MINIMUM TAX WILL RISE FROM £20,000 TO £22,000

AND THEIR TAXABLE INCOME FROM £70,000 TO £80,000

- HEPSS WILL BE TAXABLE ON UP TO £120,000 OF INCOME (UP FROM £100,000)

• STAMP DUTY

- STAMP DUTY ELIMINATED ON AFFORDABLE HOMES AND RAISEDON HIGHER VALUE AND LUXURY PROPERTIES

- EXEMPTED VALUE RAISED FROM £160,000 TO £200,000

- FOR PROPERTIES BETWEEN £200,000 AND £350,000, 2% ON THE FIRST £200,000 AND 2.5% ON THE BALANCE UP TO £350,000 (PRESENTLY 1.26% TO 1.6%).

- FOR PROPERTIES ABOVE £350,000, 3% ON FIRST £350,000 AND THE BALANCE AT 3.5% (PRESENTLY 2.5%)

• OTHER BUDGET MEASURES

- EMPLOYEES’ MAXIMUM SOCIAL INSURANCE CONTRIBUTIONS WILL RISE BY £1.42 PER WEEK OR 6%. NO INCREASE FOR WORKERS WHO EARN LESS THAN £12,000 PER YEAR.

- SELF EMPLOYED SOCIAL INSURANCE CONTRIBUTIONS WILL RISE BY 10%

- ELECTRICITY CONSUMPTION TARIFFS WILL RISE BY 5%. NO INCREASE IN STANDING CHARGES. THEREFORE INCREASE IN AVERAGE HOUSEHOLD ELECTRICITY BILL IS 3%.

- WATER TARIFFS WILL RISE BY 3.5%

• CIGARS

- AD VALOREM DUTY ON CIGARS ABOLISHED AND PER KILO DUTY INCREASED TO £6.50

• ENVIRONMENTAL MEASURES

- IMPORT DUTY ON SOLAR PANELS AND RELATED EQUIPMENT – ZERO

- IMPORT DUTY ON PEDAL BICYCLES – ZERO

- IMPORT DUTY ON ELECTRIC CARS- ZERO

- IMPORT DUTY ON HYBRID CARS CUT IN HALF

- IMPORT DUTY ON TWO STROKE MOTOR CYCLES (WHICH CREATE MORE POLLUTION) INCREASED FROM 6% TO 30%

- IMPORT DUTY ON FOUR STROKE MOTOR CYCLES IS HALVED FOR DEALERS

FROM 30% TO 15%

- IMPORT DUTY ON MOTORCARS WILL RISE FOR DEALERS, AS FOLLOWS:

o LESS THAN 1500CC BY 2.5% FROM 12.5% TO 15%

o 1500CC TO 2000CC BY 3% FROM 15% TO 18%

o OVER 2000CC BY 4.5% FROM 17.5% TO 22%

• STATUTORY MINIMUM WAGE RISES BY 8% FROM £5 TO £5.40 AN HOUR FROM 1ST JANUARY 2011

• UNIVERSITY STUDENT GRANTS RISE 10% FROM NEXT TERM. EXTRA £543 FOR LONDON AREA STUDENTS AND £441 FOR STUDENTS OUTSIDE LONDON AREA

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