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Groups representing the island's shops have thrown their weight behind paying 10% tax.
Both the Jersey Chamber of Commerce, and the newly-formed Jersey Retail Association have spoken out against paying tax at a 20% rate, as will be recommended this week by the island's Treasury Minister in Budget 2018, which States Members will begin discussing tomorrow.
But they say they are prepared to pay tax at a 10% rate which is being proposed by Senator Philip Ozouf. If politicians agree that though, they may look for other ways of making up the shortfall, such as by including the drinks trade and betting shops in the tax, or by slashing the duty-free allowance.
It's believed the Co-op, and other businesses deemed to be "mutuals," would be exempt from the new tax, either at 10% or 20%, in a move which is bound to cause controversy in an intensely competitive market. Senator Ozouf is also proposing that the "mutuals" loophole be reviewed. As well as supermarkets, its understood businesses such as car dealerships and garden centres would fall under the new tax.
Pictured: Local retailers say they're prepared to pay the 10% tax being proposed, but may need to find ways to make up the shortfall.
In a statement released over the weekend, the Chamber of Commerce attacked Ministers for using businesses as a 'cash-cow' and listed a number of new 'taxes' which had been proposed such as the Jersey Infrastructure Levy and waste charges - but it went on to say that the sector did want to pay its way:
"While Jersey’s tax regime is based on the zero - ten structure, Chamber cannot support a new business tax that is set at 20%, a rate that clearly contravenes the existing arrangement, a rate that threatens future investment in training, premises, products and services. However, if States Members vote in favour of this budget proposal, Chamber could support a retail tax rate of 10%.
“If the Treasury Minister agreed to significantly reduce or scrap the unfair GST de minimus level, this would pave the way for capturing a considerable amount of additional tax revenue. Revenue that could be invested locally and stop the need for government to continually regard commerce as cash-cows that can plug infrastructure spending shortfalls.”
Similarly, the JRA also issued a statement supporting the 10% rate:
“The Jersey Retail Association (JRA) supports Senator Ozouf’s amendment to introduce the new tax on large corporate retailers at 10%. The JRA strongly advises that the current proposal of 20% is damaging to the mid to long term future of the industry and should be rejected to protect States Revenues through GST, jobs (the industry provides 13% of employment) and the economy. Island retailers are content to pay tax at a fair level and a 10% rate is in balance with that levied on the Financial services industry."
On Tuesday the island's politicians will need to decide if they was to broaden the tax net to include retailers, and if so, at what rate.
Treasury proposals would see shops making more than £500,000 in profit per year slapped with tax bills of up to 20% if more than 60% of their sales occur in Jersey.
Around 20 retailers, who were previously subject to 0% tax, are expected to be affected. Due to the narrow definition, online-only retailers are unlikely to be included.
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