Politicians approve "steady as we go" Budget

Thursday 06 December 2018

States Members have agreed the Budget for 2019, 43 votes to 2.

The price of alcohol will still rise and retail tax will remain at its full 20% after two proposed changes to the 2019 Budget were kicked out by States Members. An additional attempt to change tax rules so that two thirds of taxpayers would be given a cut was also voted down.

The Assembly this morning entered their second day debating Treasury Minister Susie Pinel’s spending plan for the year ahead, which she characterised as being "steady as we go".

Yesterday, St. Helier Constable Simon Crowcroft had brought forward plans to reduce the new 20% retail tax to 10% next year.

In an unprecedented show of business support, he was backed by the Jersey Chamber fo Commerce, the Jersey Retail Association, Jersey’s Consumer Council and Town Centre Manager Daphne East.

Pictured: Constable Simon Crowcroft led the charge to slash Retail Tax to 10%.

Together they claimed that charging the island’s largest retailers 20% tax would drive out investment from the town centre, and would continue to fuel the rise in empty premises. 

In a bid to convince his fellow politicians to vote in favour of slashing the divisive tax, which was introduced by former Treasury Minister Alan Maclean last year, he pitched the move as a compromise that would still allow the States to reap financial benefit, while also serving to help invigorate the island’s struggling retail sector. 

Debate over the plans were lengthy, spanning the morning States Assembly sitting and part of the afternoon. 

The Constable of St. Brelade, Mike Jackson, who is himself a retailer, described the tax as being a “high risk” to the island’s retail industry, a “fragile sector of Jersey’s economy”. He added that potential investors needed to be given confidence “that there will be local support”. 

Deputy Steve Luce stated that he would be changing his position from when the tax was first introduced and would be supporting the amendment because he wanted St. Helier to be “busy and bustling with activity and not broken or barren of shoppers.” He said that the States Assembly had “clamoured” for the tax previously, but perhaps the 20% rate was “too far”. 

Pictured: Some politicians said they feared the Retail Tax was stimulating the rise in empty shops in town.

Deputy Mary Le Hegarat decribed the move as “adhockery”, raising the idea of empty shops and a potential impact on crime levels.

Deputy Montfort Tadier disagreed, however. He reminded the Assembly that the States were “only taxing profitable businesses at the top end”, and that there was no evidence that this tax was affecting consumers of the prices they pay.

Moreover, he stated that the States hadn’t even got to view the potential benefits of the tax yet, seeking to change the 20% rate before they had this year’s takings. The Deputy argued that perhaps the States should instead be questioning companies that continue to charge VAT on their products – the mark-up “presumably goes in their pocket”, he said.

In the end, the move to slash the tax divided the Assembly with 21 politicians voting in favour and 25 against.

During the sitting, St. Helier Deputy Scott Wickenden aimed to put a freeze on a rise on alcohol duty – a move that pushes up prices for consumers each year.

Pictured: Deputy Scott Wickenden wanted to freeze alcohol duty rises.

He sought to convince the Assembly that there were no evidenced health benefits to driving up the price, and that instead the yearly move to increase impôts was only serving to move islanders from drinking in well-regulated bar environments to their own homes, where problems with alcoholism could be hidden.

Moreover, he said successive increases in prices only served to “unfairly penslise thousands of local drinkers with a responsible approach to local drinking”, including the “working person buying a pint after a day’s work”, picnickers or families having meals at restaurants.

The Deputy said that there should be a review into how prices affect drinking levels in Jersey before impôts increases are considered again.

The Treasury and Health Ministers did not concur with the Deputy’s proposals. Deputy Pinel said that alcohol duties had “two very important functions for the States” – a “vital source” of revenue for public services, as well as being a “key strand” of the government’s health policy. She further criticised Deputy Wickenden for not having put forward a “corresponding adjustment” to the budget to fund the “large shortfall in revenue” that she said would result from his change.

Health Minister Deputy Richard Renouf, meanwhile, said that voting in favour of the idea would not be in line with the government’s commitment to creating conditions to reduce common diseases and death. He added that the control of alcohol and its pricing was integral to this, and that international studies supported this finding. 

Pictured: The Treasury Minister said that raising booze duty each year was vital for States revenues.

The idea was eventually defeated with 17 in favour and 28 against. 

The Corporate Services Scrutiny Panel had also intended to bring forward plans to change stamp duty bands in a bid to “encourage some supply, albeit in a small way”.

However, Chair of the Panel, Senator Kristina Moore, withdrew it yesterday on the basis that their proposals had “unintended consequences”, even though they had been brought with the “best intentions”.She said her panel looked forward to working with the Treasury in future on this area.

At the end of the day, the Assembly began debating an “in principle” tax proposal from Reform Jersey’s Senator Sam Mézec to give two thirds of taxpayers a tax cut, while increasing the rate for top earners in order to raise what they say will be an additional £7.5million each year.

Environment Minister Deputy John Young welcomed the spirit of the idea, but said that he would be voting against because it needed more work and consultation.

Pictured: Reform Jersey said their tax change idea would generate an extra £7.5million per year for the States.

Deputy Rob Ward, who is also from Reform Jersey, spoke heartedly in favour of the proposal, describing it as “forward-looking”. He explained that it meant single people would need to be earning £100,000 before paying 1% more tax, and that married people with two children would have to earn £300,000 between them before paying 0.4% more tax. “The benefits are for 43,000 taxpayers… As an Assembly, we represent the whole of this island, not one extremely wealthy sector of it,” he said.

However, the proposals were defeated this morning by 34 votes to 12, before the overall budget passed with 43 votes in favour.