The key driver of this year’s budget was the need to finance the second phase of the rise in the income-tax free threshold to $1.5 million, from $1 million, at a projected cost of $14.2 billion. Overall, a preliminary view would suggest Finance Minister Shaw appears to have broadly succeeded, although one might argue over the emphasis on particular areas of taxation.

Most of the rise in taxation, or $7.459 billion, comes from a specific rise in special consumption tax (SCT) on the different fuel types, essentially a “carbon” tax, ranging from 43c (per one million British thermal units) for Liquefied Natural Gas (LNG) to $7.36 per litre for Heavy Fuel Oil (HFO).

The most contentious of the measures will be the increase in the tax on gas, at $5.67 per litre (to roughly $38 if we average the 87 and 90 blends), but here Minister Shaw may ultimately be lucky with his timing. On the Wednesday before his budget presentation, oil broke through its trading range to below US $50 per barrel for West Texas Intermediate, as shale oil production in the US appears to be rising again.

In short, the partial reversal over the past year of the Saudi-driven collapse in oil prices in 2014/2015 (which was primarily designed to knock US shale oil out of the market), may be coming to an end.

OPEC’s recent output cuts will be difficult to sustain (the budgets of the oil producers won’t tolerate it), and oil as low as US$40 per barrel is again very possible as shale oil production in the US ramps up over the next six to nine months, encouraged by what appears to be an unusually pro-domestic energy production US government.

This lower price is particularly likely if either the European or Chinese economies again lose momentum in the second half of the year, both probable scenarios, reflecting European political uncertainty, and debt driven concerns in China. It is therefore possible that some or all of the increase in taxation may ultimately be offset by lower oil prices, also depending on the vagaries of Petrojam pricing.

Other measures included an increase in the specific SCT on alcoholic beverages to $1,230 per litre of pure alcohol, from $1,120, to bring in $403 million, and an increase in SCT on tobacco products from $14 to $17 per stick to bring in $826 million.

Electricity has also been targeted, through a reduction in the zero-rated residential threshold from 350 to 150 kilowatt hours per month (above which the bill will be subject to GCT) to bring in $1.498 billion, coupled with an across the board increase in motor vehicle licence and related fees of 20%, to bring in $464 million.

Finally, the insurance sector is also being asked to contribute, with the standard 16.5% GCT to be imposed on Group Health Insurance schemes, to bring in $1.884 billion, and a withholding tax on insurance premiums paid abroad at 15 per cent, projected to bring in $990 million.

Pre-budget, there had been talk of the need for much higher taxation to be imposed to offset the supposed end of the four-year roughly $11 billion annual “contribution” from NHT, which, combined with the threshold rise, would have resulted in the need for another mammoth tax package. Shaw has solved this problem by simply extending this NHT “contribution” for another year.

Finally, property taxes have also been increased through the implementation of the 2013 valuation roll (the last revaluation was in 2002), although the actual rates have been reduced to between 0.8 to 1.3 per cent (from the current range of 1.5 to 2.0 per cent), to bring in a net $3.93 billion. The latter funds are seemingly being dedicated to the dramatically underfunded local government, and not to finance the rise in the threshold, contrary to what many thought might happen.

In his presentation, Minister Shaw implied that some of this money would be used to reduce the apparently continuously rolled-over $5 billion that local governments perpetually owe the JPS for street lights. At the price of complexity (tripling the number of bands from three to nine), according to Shaw, the majority of homeowners won’t see an increase in their property tax bill.

The heavy reliance on the targeting of energy, particularly gas, rather than property, may reflect the government’s realistic assessment of the efficiency of collection, ranging from near certainty with gas (a single collection point) compared with the vast current arrears in property, despite the inability of houses and land to “move”.

Consequently, and accepting the obvious concerns, energy may still represent the only way to effectively “spread the burden”, in the words of Minister Shaw.

This is because car owners — who previously almost equalled the 469,131 registered PAYE taxpayers — will now vastly exceed the 72,038 PAYE taxpayers after the reform, all out of an employed labour force of 1.18 million.

One of the more problematic measures may turn out to be the withholding tax on insurance premiums, which currently has an exception for insurance premiums paid overseas, designed to avoid coverage problems. This issue had come up in a previous budget cycle, and amongst other problems, may be difficult to collect when most have already renewed their insurance.

Nevertheless, by the standards of previous tax packages, the measures seem reasonable, and are virtually the same options as used by the previous administration.

It is worth noting, also, that the largest single cohort of beneficiaries from this reform, at a little under 40 per cent, come from the public sector. The timing of this benefit should therefore be welcome, as the long- suffering public sector employees are now also being asked to contribute towards their pensions this fiscal year.