For businesses in Gibraltar there's good news. For current businesses that are good at keeping on top of their expenses, there's an additional 10% discount for payment of rates in a prompt fashion. New businesses starting up from the 1st of the month will enjoy the new 10% tax rate. As from January 2011, the rate of 10% will apply to all companies, in particular those that currently pay no tax at all. While this may not necessarily be good news for such companies, it was hardly unexpected, and, in the context of Gibraltar's development as a financial centre, wholly inevitable.
Those companies to which the flat rate of tax does not apply to today will enjoy a lower rate of 22% for the tax year 2009/2010. In order to help these companies pay their taxes the government has announced that it will be paying all undisputed bills to contractors within 30 days!
As far as personal income tax is concerned, the government announced measures which would benefit those tax payers currently on the gross fee based income tax scheme a reduction in the lower rate band and the addition of a zero rate generates savings of about £640 for those earning less than £25,000. A further measure sees the reduction of the 30% rate of tax to 29%, an additional saving of £750 for those making more than £25000. The top rate of tax has now also been cut from 38% to 35%.
If, in spite of the falling interest rates you're still paying enough that the allowance based system is the one for you, you'll be glad to note that all allowances have been increased by 2.8% to help sweeten the pill of those crippling mortgage and insurance payments. You'll have to pay for the privilege though by paying an additional 4% on your social insurance contributions.
As a whole, the budget delivers savings to a large number of tax payers which is certainly good news. Increases in the duty paid on petrol and rolling tobacco are inevitable as government comes under increasing pressure in respect of it's environmental responsibilities and the anti-smoking lobby.
Surprisingly, the increase on the entrance fees for the upper rock have attracted criticism focusing on the fact that the fees are referred to as an environmental levy and that such levies are not then applied to the environment. The Upper Rock probably costs more to run and maintain than the revenue it generates and, on that basis, the redirection of funds from other sources of government revenue to the maintenance of the Upper Rock somewhat justifies the governments need to increase the price of the ticket.
Whether the budget is good or bad is a matter of opinion. The fact that Gibraltar is standing strong in spite of the global financial difficulties is, however, patently clear.