Reform call to scrap tax break for high-value residents fails

Thursday 06 July 2023

States Members have rejected Reform Jersey’s motion to scrap the tax break that high-value residents receive, while simultaneously rejecting calls for a 'cost-benefit review' into the scheme.

Currently, high-value residents or 2(1)(e) residents pay 20% in tax on the first £850,000 of their income, and 1% on all income above that threshold.

Deputy Lyndsay Feltham’s proposition would have ended the 1% tax break.

She asked States Members to "sign up to the principle of fairness and equity" by supporting her proposition to ensure that 2(1)(e) residents were "treated in the same way as all other tax payers".

Her proposition also called for the Government to suspend the so-called 2(1)(e) policy until the changes were implemented, and conduct a review of its costs and benefits – but those elements of her proposition were also voted down yesterday.

Pictured: Deputy Lynsey Feltham's proposition called to scrap the tax break enjoyed by 2(1)(e) residents. 

Earlier this week, Members voted in favour of a proposal lodged by Treasury Minister Ian Gorst to raise the minimum tax paid by new high-value residents from £170,000 to £250,000 annually.

During the debate, Deputy Feltham stressed the need for concrete evidence to demonstrate the benefits of the scheme, stating that the Government had failed to consider the effects of the policy in light of "current high employment and a workforce shortage, the housing crisis and the rising cost of living".

Deputy Rob Ward, also of Reform Jersey, echoed Deputy Feltham’s call for more evidence, saying: "A comprehensive cost-benefit review should be happening anyway with any system we have that we claim adds value to this island. Because if it doesn’t, then we need to rethink it ... why would you carry on a with a scheme that does not add value to our society?"

Ministers offered a variety of responses to Reform Jersey’s claims.

Chief Minister Kristina Moore was keen to point out the "intangible" benefits that high-value residents bring to the island, citing their "dynamism" and "entrepreneurial spirit".

Pictured: Ministers were keen to point out the philanthropic contribution made by High Value Residents. 

Additionally, Economic Development Minister Kirsten Morel pointed to the philanthropic benefits that wealthy immigrants bring with them, explaining that they included contributions to the Government’s Ukraine appeal, pandemic response appeal, the gift of Millbrook playing fields and a £120,000 donation towards a project to "bridge the digital divide in primary and secondary schools".

Reform leader Deputy Sam Mézec responded by saying that all the Government had to offer was "anecdote, anecdote, anecdote". 

The Assembly ultimately voted to reject all aspects of Deputy Feltham’s proposal.

28 Members voted against amending the 2(1)(e) tax break, while 12 voted in favour of it. There were two abstentions.

Deputy Feltham’s call for a review of the policy was narrowly rejected by 21 votes to 19, with two abstentions.