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Large retailers are likely to be hit with taxes of up to 20% on their profits after efforts to bring that number down to 10% were kicked out by politicians in yesterday’s Budget debate.
On the first day of debate into how the States will spend taxpayers’ money next year, and generate new revenue for the island, the Treasury Minister Senator Alan Maclean argued his case for the new tax, which will hit those making more than £500,000 in profit per year.
In his Budget speech, the Minister told the States Assembly that his plans answered calls for non-locally owned businesses to pay tax on the island, and brings Jersey in line with Guernsey and the Isle of Man.
But Senator Philip Ozouf – himself a former Treasury Minister – slammed the proposals for their potential detrimental effect on the high street. He instead proposed to slash the tax to 10% and plug the funding gap with a raft of measures targeting gambling, alcohol, high value residents and the liquor trade.
Pictured: Senator Ozouf's raft of measures, which included taxing the on-licence liquor trade, were aimed at paving way for a 10% rather than 20% tax on large corporate retailers. They were kicked out by a majority of States Members.
But all of his ideas were thrown out by a significant margin, following a lively Assembly debate. Those were:
In a speech to convince his fellow States Members, Senator Ozouf argued that introducing the new tax would hurt Jersey’s “diverse retail offering”, which he said attracted customers from Guernsey to do their Christmas shopping. He added that it would make “income inequality worse rather than better” if the tax is passed onto consumers in the form of higher prices.
Aruging that the 200 duty-free limit on cigarettes was a “relic of the past when people didn’t realise the damage”, he added that his measures would help to tackle the health issues associated with smoking, noting that “140 people die prematurely every year” due to tobacco-related illnesses.
The measures were blasted as “unpoliceable” by Senator Lyndon Farnham, the Minister for Economic Development, while Deputy Simon Bree raised concerns that this, alongside the gambling measures, would hurt those on the lower end of the income scale. “They are the ones that have the smallest amounts of disposable income after all other bills have been paid. That little amount of disposable income they have they want to be able to spend on themselves… What we have is a government that says, ‘No, we know better.’” Deputy Bree commented.
Pictured: Some States Members lauded the health principles behind Senator Ozouf's proposals to slash the duty-free limit on cigarettes. It was thrown out, but the Treasury Minister said he would conduct a review on the idea.
Deputy Montfort Tadier queried with the Solicitor General how low the legal duty-free limit could be taken, which returned an answer that the island should be “cautious” in lowering its limit as this may incur action taken against the island by countries bound by the same international customs laws.
The Council of Ministers declined to support any part of Senator Ozouf’s proposals, but Treasury Minister Alan Maclean promised that a review would be undertaken on the first three parts of Senator Ozouf’s amendments. He also pointed out that the Senator had “clearly changed his views” after having voted in favour of a 20% retail tax during last year’s budget.
After significant concerns by the Jersey Retail Association and the Chamber of Commerce, who said that they would have been in favour of 10% taxation, Assistant Treasury Minister Constable John Refault reminded members that there would be no “cliff edge”, adding that the tax “starts low at 1.2% and climbs gradually” to 20% at £750,000.
Minister for Infrastructure Deputy Eddie Noel moved to further assuge fears that the tax was “unfair”, adding that utility companies and developers already pay tax of 20% on their income.
Pictured: Utilities companies, such as Jersey Telecom, already pay a 20% tax. Deputy Eddie Noel reminded the Assembly of this.
Deputy Sam Mezec said that he welcomed the proposals for tax, joking that he had first heard from the Minister that he would seek to introduce such a tax nine years ago when he met him at a hustings. Nonetheless, he said that he would rather see the financial services pay the same amount of tax, but added that the “smarter way” would be to vote against the Budget entirely and “send it back to the drawing board.”
While the Assembly’s decision to vote against Senator Ozouf’s proposals saw the booze and gambling sectors get off scot-free, retail is now likely to feel the full force of a 20% tax.
The proposals were the first casualty of numerous amendments proposed to the Budget. Meanwhile, Grouville Constable John Le Maistre’s plan to make more vehicles pay vehicle emissions duty were heartily welcomed by both the Assembly and the Council of Ministers.
Under his plans, the minimum emission rate for a vehicle to incur the tax would decrease to 50g to 100g of carbon dioxide per kilometre. He said it should raise as much as £2.2million annually.
Numerous States Members lauded the proposals' eco credentials. Assistant Minister and Deputy Murray Norton called the plan a “step in the right direction”, while vegetarian of 45 years Constable Michel Le Troquer praised the measure as a way for Jersey to “lead by example.” Reminding his colleagues that "every little bit counts", he commented: “Jersey might be a small player, but we’re a big player in the international scene."
Pictured: Vehicles producing more pollution could be charged a higher rate of duty thanks to the Grouville Constable's budget amendment.
33 voted in favour, and 10 against. There were 6 abstentions.
The Budget debate will continue this morning, with the first item on the agenda relating to a decades-long battle to get the States to pay rates on public buildings.
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