Treasury Minister warns taxes will rise

Wednesday 15 May 2019

The Treasury Minister has given her biggest warning yet that taxes will rise, as the government strives to fill a £30million black hole.

The words of caution came from Deputy Susie Pinel as she addressed the Chamber of Commerce – the island’s key business lobby group – at an event this afternoon.

While no detail was provided on the potential kinds of tax rises she had in mind, Deputy Pinel emphasised in her speech that both businesses and individuals would have to play their part to ensure that the island can continue to provide “high-quality services” amid increasing financial pressure.

She explained that the previous government had committed to a certain level of public spending to be funded through initiatives such as a commercial waste charge, and a long-term health tax.

Pictured: The Treasury Minister said tax rises were necessary to meet the needs of essential public services.

But with those having been kicked out in votes by States Members, the Minister spoke of the current government now being left with a “legacy” of debt – last year’s accounts saw government’s spending exceed revenue by £75million – which “will get worse as we face a financial deficit of £30 to £40million from next year.”

While she said the Chief Executive was looking at making savings, and that Revenue Jersey had chased an additional £8million in uncollected taxes last year, Deputy Pinel explained that there was one frontier yet to cross to continue ensuring that public services can be provided at their current level: raising taxes.

She told the Chamber: “We currently have some of the lowest rates of income tax, GST, and property rates in Europe, and our Social Security contributions are half of those in UK– yet we still complain about the perceived burden of taxation.

“I’m convinced that if islanders want to continue to enjoy high-quality services, the Government will, as part of a balanced strategy, also need to consider appropriate revenue-raising and cost recovery measures for the future…

“Nobody wants to see permanent reductions in nursing, in policing, in fire and ambulance, in schools, in roads and sea defences, or in environmental protection. Quite the opposite, in fact.”

Thank you to Deputy Susie Pinel, Minister of Treasury and Resources for sharing with the audience, the difficult decisions she has to take to ensure the finances of #JerseyCI remain sustainable @jerseychamber #ChamberLunch pic.twitter.com/7OdeP0YfhK

— Grant Thornton CI (@GrantThorntonCI) May 15, 2019

But it wouldn’t just be individuals hit by tax rises – she said the government also “wants businesses to pay a fair and proportionate contribution to public services”.

“The majority of businesses benefit from our Zero/Ten corporate tax regime and low property rates.

“Yet many baulk at the prospect of the government recovering the cost of dealing with commercial waste – something that they would pay for without question in almost all other countries… No-one should avoid paying the tax for which they are liable.”

Emphasising her “commitment… as the one who signs the cheques for the government” that she would ensure that they are “scrupulous” in only spending on necessary projects, Deputy Pinel later said that she would be keeping a particularly close watch on expenditure on the Future Hospital, with the aborted project in Gloucester Street having led to write-off costs of £27million.

“I will challenge all bids for additional funding on so called ‘further exploratory work’, to seek to ensure that such bids come with clear outcomes, timelines and overall budgets,” she explained.

Deputy Pinel was also critical of the recent States Assembly decision to increase arts and culture spending, following a proposal by Deputy Montfort Tadier.

Pictured: The Minister said she would "challenge" all bids for money relating to work on the future hospital.

She explained: “I must carefully weigh up each of these requests and assess the long-term benefit of each one – not in isolation, but in the round, compared to other requests. 

“But not all States members agree. For example, a recent States decision to increase funding for the Arts by £2.3 million pounds per annum, i.e. recurring expenditure, should, in my view, have been considered against competing and, to many, equally deserving bids for funding which currently come to over £100 million pounds per annum.

“We cannot afford to meet all bids and to consider bids in isolation makes no sense to me.”

Elsewhere in her speech, the Treasury Minister noted that statutory workplace pensions need to be considered and highlighted her attempted reforms of the "archaic" income tax legislation, which labels a woman the "chattel" of her husband - something described by the Minister as "ridiculously outdated and unfair".

She also urged businesses to back the proposed family-friendly legislation, which has been the subject of much controversy in the business community.

Pictured: Deputy Pinel urged businesses to back family-friendly legislation.

"Business long-term profitability and sustainability is based on, and not an alternative, to investing in your people. A happy and engaged workforce is a loyal and productive workforce, with lower staff turnover and more discretionary effort. With this in mind, I ask you to move beyond the, arguably, short-term thinking that has led some to oppose the proposed new Family Friendly Employment Law," she said.

The Treasury Minister went on to explain: "86% of women in Jersey are in employment, and yet we have nothing in our law to protect the rights of breastfeeding mothers returning to work. The first few weeks and months of a child’s life are crucial for parental bonding."

Concluding, she said: "My mandate of A.B.C. - Affordability, Balance and Common Sense - continues to apply to the decisions in life both personally and professionally.

"In a very uncertain Global Climate, I hope the ABC of Treasury will steer a steady course."