Tax write-off 'would cost £320m'

Wednesday 26 August 2020

The Treasury Minister has once again rejected calls to write off last year's tax bill for thousands of islanders on the prior-year system, saying it would leave a £320m black hole in the public purse.

The comments from Deputy Susie Pinel come after more than 5,500 islanders got behind a petition from former Senator Ben Shenton.

Responding to Treasury plans to move the 45,000 islanders paying their taxes in arrears onto a system where they pay based on their current earnings, he urged the Government to cancel's the previous year's liability altogether, as had been the in Guernsey when its States changed its system.

However, in her official reply to the petition this afternoon, the Treasury Minister emphasised that this would not be possible due to the effects of the pandemic.

Pictured: The petition has been created by former States Member Ben Shenton.

This, she said, was because it would strike a £320m blow to the public purse at a time when the Government is having to carry "significant additional costs" to deal with covid.

She also noted that this would unfairly disadvantage islanders paying their tax on a current-year system, as well as those who have already settled their 2019 bill.

Echoing her comments in a previous letter to taxpayers, Deputy Pinel explained: “I understand that at a time of uncertainty, some people may be concerned about proposed changes to the way they pay their tax, and want to make their opinion heard. 

“However, I have brought forward this proposal not just to simplify the tax system, but also to support the estimated 30% of Prior Year Basis taxpayers who have seen their 2020 income drop significantly, and who could struggle to settle their tax bill for 2010.

“While I appreciate islanders’ concerns, it would be both unfair and financially imprudent to allow two-thirds of taxpayers to not pay their 2019 tax liability. I’d also urge them to raise these concerns through the feedback survey that is still available.”

That survey has, however, come under criticism as it focuses on how the tax change should be implemented, rather than whether islanders support a change at all. Some took to Twitter to voice their concerns.

I agree it is a leading questionnaire. You can’t put your views forward properly. This is a railroad job we are going this like it or not so choose your least painful option.

— Kate Wiseman (@doodlemoodle) August 22, 2020

As the petition has passed 5,000 signatures, it will still be considered for debate by States Members ahead of the key debate on the potential changes to the tax system in autumn.

If the Treasury proposal is approved, those on the prior-year system will be able to choose from a number of repayment plans,including an option to pay it back over a period of more than 10 years.