Tax reform: “With equal rights come equal responsibility”

Tuesday 04 February 2020

The Treasury Minister has made a final push to defend her plans to overhaul Jersey’s tax system against backlash from local businesses and backbenchers.

Deputy Susie Pinel has insisted that her latest in a series of planned reforms to personal taxation will not have a “negative financial impact on any couple," reminding islanders that “with equal rights come equal responsibility."

Due to be debated by States Members today, the proposition aims to give both people in a marriage or civil partnership equal say in handling their tax affairs, as well as making them jointly liable for paying income tax and filing their returns.

Pictured: These proposals plan to give both partners equal rights and responsibility for their tax matters.

It proposes that in 2022, when filing their tax matters for the previous tax year, the couple: 

• will still receive a joint return, but will both have the right to sign it;
• will have equal rights to access and manage their tax affairs;
• will have joint responsibility for paying income tax from that time.

The plans, which have been in the pipeline for several years, have faced backlash from various sources including the island’s key business lobby, the Chamber of Commerce.

Representing over 500 businesses in Jersey, Chamber expressed concerns that the Minister’s vision for the tax system would create “further issues” for married women and civil partners. 

A Scrutiny Panel tasked with going through the plans with a fine-tooth comb have also spoken out against the plans, fearing that joint tax liability for both partners will end up unfairly hitting low income families and children.

This follows news that an immediate move to independent taxation – where people are taxed as individuals regardless of marital status – could squeeze higher tax rates from around 8,000 lower-income couples. Tax officials say that they are trying to find a way to alleviate this negative impact before bringing proposals for independent taxation.

Issuing a statement responding to her critics a day ahead of the debate on the initial married tax rights and responsibilities, Deputy Pinel said: “I am proud to be leading this important work and to present my proposition for the first stage of personal tax reform. 

“This proposition will finally give equal rights to both spouses and civil partners under Jersey’s tax law. It will remove the archaic presumption in the current law that a wife’s income is deemed to belong to her husband.  

Pictured: The proposition for the first set of married tax reforms will be debated in the States today.

“To be clear, my proposition has no negative financial impact on any couple. It simply brings to an end an outdated system that treats married women and younger spouses in same-sex relationships unfairly. 

“A very small number of commentators have raised concerns over part three of the proposition, which makes a couple jointly liable for the payment of any outstanding taxes that they may owe. But with equal rights come equal responsibilities and we will ensure that appropriate safeguards are in place in the event of financial hardship. 

“I would also like to clarify some of the confusion created between my proposition and the accompanying report, which contained further information on future details surrounding independent taxation.  

“The report into independent taxation highlighted the potential financial impact that it may have on around 8,000 lower-income married couples and civil partnerships, which I have made clear is not acceptable. This is one of the reasons why we are not yet ready to move to independent taxation and why I am not presenting this as an option today.    

“I remain completely committed to delivering independent taxation and plan to present a further proposition for debate in 2021. In the meantime, my officers and I will carry out a consultation and review to ensure that we fully understand any potential financial impacts that independent taxation may create and can put in place suitable measures to mitigate them, to ensure that no family is left in financial hardship as a result.”