States Members will have to consider debating writing off last year’s tax bill for thousands of islanders after more than 5,000 signed a petition.
The petition was set up by former Senator, Ben Shenton, in response to the Treasury Minister’s plans to move the 45,000 islanders paying their taxes in arrears – a system known as Prior Year Basis – onto a system where they pay based on their current earnings (Current Year Basis).
In order to enact the change, that group will have their 2019 bill frozen until January 2023, with a range of repayment options after that date – including an option to pay it back in instalments over 10 years or more.
Amid these reforms, Mr Shenton wants the government to cancel the previous year’s liability altogether, as had been the case in Guernsey when its States changed its system.
Pictured: The petition has been created by former States Member Ben Shenton.
He writes: “The Government is seeking to move to current year basis while still holding taxpayers liable for what they owe for the previous year – in effect doubling their tax liability. Those with a £21,000 tax bill would be charged an additional £350 per month for five years (£4,200).
“Their earnings needed to cover this payment would itself be taxed during the current year at 20 per cent (so you would need to earn £5,250). With many people struggling under the current pandemic the Government proposal is unjust.”
The petition hit 1,000 signatures - enough to gain a Ministerial response - last week. Yesterday, the total went over 5,000, meaning that States Members will have to consider officially debating the proposals.
According to the Treasury Minister Deputy Susie Pinel, the petition’s demands aren’t viable.
“…I want to emphasise that the Government isn’t in a position to ‘write-off’ the 2019 tax bill, which amounts to £320 million, due to the additional covid-19 related costs the Government has had to meet over the last few months. In addition, such a move would not be fair to former PYB taxpayers who have already paid off their PYB liability, or to CYB taxpayers,” she said in a statement released in the days after the petition hit 1,000 last week.
The plans are not set in stone, however.
Feedback on the idea of moving to Current Year Basis and the various repayment options is currently being gathered.
Deputy Pinel urged islanders to have their say.
She commtented: “Affected islanders could have the option to pay their 2019 tax bill in instalments over a much longer period – for example, over five to 10 years. They could have the option to choose whether to make monthly or quarterly payments. We are also considering introducing an affordability test to support people who might need to pay their bill over a longer term.
“The only people who would pay their 2019 tax bill in full in 2023 are those who choose to do so.
“A table showing examples of monthly payments over five and 10 years for different sizes of tax bills is available at gov.je/TaxReform and I’d urge people to take a look at this.
“In addition, I would ask islanders to complete our feedback survey. Their views on the proposal and the payment options really are important to us.”
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