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Tax relief on childcare in Jersey could double next year.

The move was announced in the Treasury and Resources Minister's budget for 2012.

If the States agree, working parents with children aged three and under will get £12,000 tax relief on their childcare bills.

Fiona Vacher, from the Jersey Child Care Trust, said the minister was helping the right families.

She said: "It will help some parents with the dilemma of whether they should go back to work or not.

"Parents are feeling the squeeze enormously at the moment and this will help working families."

The budget also includes a 4.5% increase in the amount people can earn before paying income tax.

However, duty on tobacco is going up 10%, adding 35p to a packet of cigarettes, and tax on alcohol is also going up 5% - adding 6p on a bottle of wine and 1p on a pint of beer.

Treasury Minister, Senator Philip Ozouf, said there was good news for motorists as there was no increase planned on fuel duty.

Senator Ozouf said Jersey's government was on track to get rid of the black hole in public finances.

He said: "We are on track to meet our savings target, to close the £100m deficit and to balance our budget by 2013. We are in a strong position.

"We are, however, conscious that many families have been feeling the pinch and with that in mind, this budget proposes to almost double the child care relief for younger children.

"This is the biggest targeted improvement in taxation for families with young children that the island has ever had."