States reject £30,000 tax review

Tuesday 27 September 2016

States members have decided not to order a review of their tax systems following a near three-hour debate today.

Despite pleas by several States members for the review, the vote went 30-18 in favour of making no amendment to the Medium Term Financial Plan (MTFP).

Newly-elected Senator Sarah Ferguson proposed an amendment to the MTFP saying a review into Jersey’s tax system is “desperately” required. 

Senator Ferguson said the review was right for the Island as there is a paucity of information about the current tax systems. She called Jersey’s current tax laws “bizarre” and proposed a review costing around £30,000 and lasting between five to six weeks. 

She said: “This review is about obtaining information only. It is time to get solid data on our tax systems and it will come at a very reasonable cost. There have been 32 changes in personal tax systems since 2007 and yet we have had no impact assessment on the tax-paying public.  

“We need to return to a straightforward tax system which is fair. Profits earnt in the Island should be taxed in the Island. 

“The tax statistics are strange, bizarre even and we need the review desperately. In 2007, we had 14,989 people paying tax at 20%, but by 2014 that figure was 5,300. Where are they? I suspect they have moved their assets into companies, but we just don’t know.   

“I am hearing tales of people in tears because they are trying to pay their tax bill. There is great inequality in our Island. Middle Jersey is hurting and hurting badly. That is why I propose the amendment.”

The Treasury Minister Alan Maclean said while he agreed with the principle of regular reviews into tax systems, he insisted that a small-scale investigation, such as the one proposed, was not necessary. 

Minister Maclean said: “I delighted the Senator was elected, but perhaps it would have been better had it been in October. 

“I agree with the principle of what she is hoping to amend and no tax system is perfect, but I do not agree with the method or the timing of this proposal, because much of what she wants has already been done, or it is committed to be done. 

“Why not have a review? That seems perfectly reasonable. What harm can be done and it is surely a good idea to collect as much data as possible. 

“But if it costs only £30,000 and takes five or six weeks, I will remind members of an old saying, if it looks too good to be true, it probably is. The chances of having a meaningful review within five to six weeks is remote. It would take months to to do the job properly and take considerably longer than the amendment. That is not to say it shouldn’t be done, but not in this way.

“To maintain a competitive financial services centre which currently employs around 13,000 Islanders, Jersey needs to remain a responsible, stable and world class jurisdiction. This open-ended and far-reaching amendment would undermine our reputation for stability and certainty and could jeopardise future investment.”

Deputy Geoff Southern insisted the amendment was required, saying: “We need a review of what our tax position really is. We need to see how we got here and what we might possibly look at to try and get out of it?”

Deputy Tracey Vallois said the Treasury Minister believes the amendment would affect Jersey’s reputation for fiscal stability, but there has been precious little detail about proposed waste charges. 

She said: “There is a slight bit of hypocrisy about these debates when talking about instability to do with our tax systems. On the other hand we are told, let’s agree a waste charge, without any information. We are going to take £11million out of a department’s budget and hope, finger’s crossed, that the Government comes back next year with the right details.   

“This review of tax should have started last year.”

Chief Minister Ian Gorst said: “We have heard project fear and I don’t believe in project fear. I am not fearful about our future. We have a plan which will deliver on the social provision that our community requires and will need into the future.”