Controversial new building "tax" kicked out

Friday 15 December 2017

It’s been heavily criticised by land owners, developers and business groups – and now politicians have also kicked out a new development "tax" which opponents warned would push up house prices.

The proposal put forward by the Environment Minister meant those who benefited from an increase in land value from planning permission, would have to pay to counter the impact the development might have on the surrounding area and community.

This contribution would have been applied to developments over 75 square meters, receiving planning approval after April 2019. Social housing and charity developments were exempt.

In the debate in the States today, Deputy Steve Luce said, “…this is not about hitting young families, it’s not about hitting people wanting to refurbish their properties and not increase the size of them. This is all about taking a very small part of the massive profit that accrues when people sell land. (…) When we looked to see if the scheme is viable we’ve always allowed on average 20% profit margins for developers.”

Deputy Jeremy Maçon, who sits on the planning committee, gave his support for the move as he believed, “…current planning obligations don’t go far enough to support the impact developments have on the community.”

Pictured: The Environment Minister lodged the Infrastructure Levy proposition to raise between £1.5million and £2.5million a year

But a number of backbenchers voiced concerns.

Deputy John Le Fondré questioned whether this new charge was to, “...raise revenue or punish people”. He added: “…the minister doesn’t have any evidence which proves house prices won’t be affected.”

It was an issue also raised by Deputy Simon Brée, who urged politicians against the Levy saying, “…it’s aimed at land owners not developers.” He called it a capital gains tax that will, “…push land prices up which will have a direct result in pushing house prices up.”

In the end the new charge was narrowly defeated by  18-21 votes.

Jersey’s Chamber of Commerce has labelled the decision as, “..the right one.”

The business group said it's, "...pleased that the island' s government has seen sense and decided to reject JIL, which was another new business tax. Not only is this good news for developers and commerce it is also good news for home buyers, as the cost of JIL would have inevitably been passed onto the consumers and house prices would have risen."

Ogier has also welcomed the rejection of the proposition saying it, "...leaves the Planning authorities still able to use the existing Planning Obligations system to support community projects and onsite infrastructure improvements through Planning agreements placed on developments (...) the existing system is working well and just needs to be applied more consistently."