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Business leaders have launched a scathing attack on the States decision to bring in a 20% retail tax, saying it will be "extremely damaging" for all sectors of the economy. Chamber says the move will force more sales online, reduce investment, push up prices, cut training budgets and may cause job losses. And they have warned other sectors could be next in line for a new tax.
The States decided by 26 votes to 14 to support the new tax, despite a direct warning from the Economic Development Minister that it would jeopardise a £20million investment in the retail sector - Senator Lyndon Farnham then missed the critical vote.
Earlier in the week, States Members had decided not to bring in the tax at 10% rather than 20%, something which was supported by both the Chamber of Commerce, and the Jersey Retail Association.
Chamber then issued a scathing statement once the island's politicians opted for the full 20% rate, which is double the rate paid by financial services firms:
"The decision made today by States members to introduce this new 20% retail targeted tax is extremely damaging for all sectors of commerce. Despite severe warnings from both the Jersey Chamber of Commerce and Jersey Retail Association, that such a tax would negatively impact future investment in training, premises, products and services, the States have chosen to ignore sector-wide warnings and push ahead with the tax as part of the 2018 Jersey Budget.
"Large retailers, which are the target of this new tax, will now either shelve plans for development or substantially reduce them . Employment opportunities may stagnate, as will investment in training . The ultimate loser will be the Jersey consumer, who may have to pay higher prices, especially in food retail.
"Ultimately this tax could threaten the future viability of retail businesses, jobs and potentially see a reduction in the IT IS , Social Security and GST take for the States. All of which clearly erodes the £5.5million that the Treasury Minister has earmarked to raise by this tax."
Large corporate retailers will now be taxed at 20% in common with utilities, and property developers - double the rate for regulated financial services companies, meaning Jersey has a 0/10/20 tax system.
Senator Alan Maclean says the tax will raise £5.7 million from around 20 retail businesses who earn more than £500,000 in profit and do more than 60% of their business in Jersey.
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