Hundreds of civil servant posts are to be cut as part of a five-year plan to "re-balance" the finances of the Isle of Man government.
In the past year staffing levels have already been cut by 99, but Treasury Minister Anne Craine said 285 more posts will go.
There are currently more than 8,000 government employees on the island - about 10% of the population.
Mrs Craine said: "We can't rule out redundancies."
She added: "We will look at posts which have been lying unfilled for some time and those posts will be getting close examination to see if they are absolutely necessary.
"When people retire, their job will not automatically be re-filled because we are looking to see where savings can be made in delivering our service in a more efficient way".
Anne Craine also warned that the days of inflation-matching salary increases in government were now over.
In the Isle of Man Budget 2011 the government has announced savings of £25m by cutting government spending in each department, except for Health.
The Treasury department has been the worst affected with a reduction of 7%, while the Health department has seen a rise in spending of 6.5%.
Home Affairs spending has been reduced by £2.25m to £32m and Environment Food and Agriculture faces cuts of 6.3% to just over £15m.
The standard rate of income tax (10%) and higher rate (20%) remain the same.
'Very fortunate position'
As well as the cuts, the government has announced a 7.7% increase in Personal Allowance Credit, a benefit paid to about 11,000 people each year.
Mrs Craine said: "We are trying to protect those on lower incomes, that will be at the expense of those on higher incomes.
"The story behind this budget is that we are doing very well but we are not out of the woods yet.
"We are in a very fortunate position with a strong economy, low levels of unemployment and a business sector which is thriving and a diversified economy."
The Isle of Man government has also announced the abolition of the attribution regime for individuals (ARI) in an attempt to end concerns over zero-ten.
ARI is a tax anti-avoidance system which the European Union is likely to identify as 'harmful' in its monitoring of the island's tax regime.
European finance ministers (ECOFIN) have been examining the effects of the island's Zero-Ten tax regime.
Zero-ten means some companies pay no corporation tax and others 10%.
The attractive rates have attracted business from all over the world including companies involved in e-gaming and the space industry but local companies are unable to benefit in the same way as off-shore business.
By withdrawing ARI it is hoped the EU working group will be more likely to view the island's current tax regime favourably.