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Business leaders in Jersey are warning that the proposed new 'High Street Tax' could "..erode the island's current tax structure."
Announced yesterday as part of the 2018 Budget, the Treasury is proposing to tax retailers who earn more than £500,000 in annual profit. Chamber described the Budget as "neither surprising nor inspiring for commerce."
To qualify, a retailer must gain at least 60% of their income from sales in Jersey and make more than £2million per year - the Treasury believes about 20 businesses fall into this bracket and so will be taxed up to 20% a year, generating an estimated £5.7m.
However, the Chamber of Commerce is warning that taxing large corporate retailers will set a precedent, and the Treasury may then go after sectors too, eroding the island's carefully balanced tax structure which sees many local businesses pay no tax, unless they are in financial services (10%) or one of the utilities (20%).
It is unclear how far the island will be able to change that structure, before it starts to concern bodies such as the EU Code of Conduct Group which monitors so-called 'harmful' tax practices.
Chamber's Vice-President, who is also the Chief Operating Officer of the CI Co-op, and Chair of Chamber's Retail Sub-committee, Mark Cox, warned against the move:
“It is important that commerce makes a fair contribution towards the island and the introduction of this tax appears to provide a degree of continuity for all retailers with a presence in Jersey. However, throughout 2017 there has been a constant drip feeding of business levies, charges and taxes.
“Jersey must have a tax regime that it is both fair and fit for purpose. Along with the Jersey Infrastructure Levy and the proposed liquid and solid waste charges, this new retail tax is another tax on business. Chamber is concerned that once a precedence is set with the retail sector, the States will then look to roll out this type of tax across all sectors of commerce, which would go some way to eroding the current tax structure.”
"Our members and commerce as a whole are looking to government for business-friendly and innovative policies, that encourage growth and ultimately secure the future prosperity of Jersey. Quick wins and a constant erosion of the island’s existing tax policy, is not the way to achieve this.
The 2018 Budget was announced yesterday, introducing above-inflation tax rises on tobacco, but not on alcohol or fuel, and forecasting that the States will balance the books by 2019, with a surplus of £332,000 on a £788m budget. It's the last budget before the elections next year.
But the headline announcement was the plan for a High Street Tax, which has been strongly criticised by a local fashion entrepreneur. The plans will be debated at the end of November.
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