Tax: "We're concerned about the effect on low income families"

Monday 03 February 2020

A group of politicians has expressed fears that tax reforms due to be voted on by States Members tomorrow will end up unfairly hitting low income families and children.

The concerns came from the Corporate Services Scrutiny Panel, which was tasked with assessing what could be the most significant change to Jersey's personal tax system in around a century.

If passed tomorrow, the plans put forward by Treasury Minister, Deputy Susie Pinel, would move islanders towards wholly independent taxation.

They would also put an end to married women needing their husband's permission to handle the couple's tax affairs - something that prevents them from using the new online filing system - and make married and unmarried taxpayers more equal.

Pictured: The tax proposals put forward by Treasury Minister Deputy Susie Pinel will be debated by States Members this week.

But while it accepted the importance of dealing with gender inequality in Jersey's tax system, the Scrutiny Panel urged the Treasury Minister to consider the potential consequences for couples with a joint income of £30,000 to £50,000, who would end up paying the highest levels of additional tax under an independent taxation system.

They said they were also worried as well as the responsibility joint and several liability would place on the lower earner - or non-earner - in a pair, as they would have legal responsibility for the tax debt of their spouse.

The findings were detailed in a report, and came following meetings with a number of groups, including the Chamber of Commerce, which on Friday urged politicians to vote against the reforms on the basis that they would create "further issues" for married women and civil partners, and the Citizens Advice Bureau.

The latter group noted that, if the tax liability for a married couple with children and claiming childcare relief was increased as a result of the tax changes, it could "affect their ability to pay their childcare costs, which would be of concern".

Pictured: Panel Vice-Chair, Deputy Steve Ahier.

Detailing the Panel's position, Vice-Chair Deputy Steve Ahier commented: "We are appreciative of the work conducted the Minister and the Tax Policy Unit, but we are concerned about the effect this proposition may have on low income families and children, and the inherent risks posed by a move to joint and several liability.

"We would urge the Minister to give further consideration to this mater."

He continued: "If the Assembly accepts this proposition, it is likely that we will conduct a second review once the draft legislation is lodged, to ensure that it meets both the principles agreed by the Assembly and the expectations we have outlined.

"Whilst we as a Panel support moving to independent taxation, we would urge the Minister to introduce this at the same time as dealing with gender inequality in the tax system."

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