On 11 July 2023, Gibraltar’s Chief Minister, Fabian Picardo QC, delivered “A Budget to support the less well-off and the overall integrity of the nation’s finances in the short, medium and long term”.
BACKDROP
- This year’s budget has shown a 24% increase in revenue from personal taxes and a 31% increase in revenue from corporate taxes over the last two years, exceeding Government’s expectations.
- Personal tax rates were increased by 2% last year on all income bands.
- Net debt to GDP ratio fell from 25.6% in 21/22 to 22.4% in 22/23.
Election this Autumn so possibly last budget as Chief Minister. - 7th year since the Brexit referendum.
- No austerity, no cuts of jobs and services.
- Annual expenditure must not exceed annual revenue.
TAX CHANGES
- Personal tax rates that were increased by 2% last year on all income bands will be halved to 1% for those earning from £25,000 to £100,000. Therefore, making the maximum personal tax rate 26%. This applies to all bands under GIBS and ABS.
- Those earning above £100,000, whether under ABS or GIBS, will continue to pay the maximum personal tax rate of 27%.
- The above is a 2-year measure and the maximum effective personal tax rate will return to 25% next year.
- In September 2023, every employee in the public sector will receive a single payment that will not be subject to tax:
- for those earning below £50,000: £1,200.
- for those earning £50,000 – £75,000: £900.
- for those earning £75,000 – £100,000: £600.
- These payments will cost £6.5 million. Private sector employers may provide similar payments on the same terms. Such payments will be excluded from payroll and will not be tax deductible against company profits.
- The first-time buyer’s allowance for no stamp duty will increase to £300,000 (from £260,000).
- There will be an increase in stamp duty on property sales above £800,000, up from 3.5% to 4.5%.
- There will be consideration on implementing stamp duty on the assignment of off plan purchase agreements.
- There will be new tax credits introduced:
- Those who are enrolled in a gym, or who contract a personal trainer who is registered with the Income Tax Office will be entitled to a tax credit of 10% of the costs verified/li>
- Those who have children undergoing private school tuition in Gibraltar will be entitled to 10% of the total cost.
- Single practitioner lawyers will be entitled to a tax credit of 75% of the LSRA fees.
OTHER BUDGET MEASURES
- Information on the EU regarding a Schengen Agreement. Talks are still ongoing.
- Those on minimum wage, receiving old age pension or disability benefit will obtain increases in line with estimates for inflation (estimated 6.2%, but rounded to 7%). Minimum wage will increase to £8.60 per hour (from £8.10).
- Occupational pensions will increase by 2%.
- Public sector employees will have a minimum wage of £21,674 per annum. This is a 16% increase and aligns with UK parity.
- The vacancy fee at the EBT shall be reduced from £18 to £8.60. The Department of Employment will introduce a penalty for not respecting the 10-day vacancy period.
- Starting from 1 August, all fees payable to the Government will increase in line with inflation.
- There will be no increase in water/electricity bills.
- Import duty
- Current measure reducing import duties to mitigate the effect of high fuel prices will remain until 31 December 2023.
- The vehicle duty cap in relation to the importation of petrol/diesel cars will be increased from £25,00 to £35,000.
- A new cap will be introduced on importation of pleasure vessels: £35,000.
- Tobacco duty will increase – 50p per carton/5p per packet of 20. Duty on vapes will be at 50% of the rate of a packet of 20 cigarettes.
- Import duty will be reduced to zero in relation to the following health & fitness related items: fitness trackers, bicycles, bicycle accessories or spare parts, treadmills and all other gym or fitness equipment.
FULL BUDGET SPEECH
- The full Budget Speech can be read here: https://www.gibraltar.gov.gi/press-releases/the-budget-2023-chief-ministers-address-4602023-9035
- The Estimate book is also available online: CM BUDGET SPEECH 2023.pdf (gibraltar.gov.gi)
