Co-op to be exempt from Retail Tax?

Monday 16 October 2017

Co-op officials are requesting an urgent meeting with the States to clarify whether they’ll fall under the proposed new Retail Tax.

Treasury Minister Senator Alan Maclean revealed earlier this month that businesses doing more than 60% of their business in Jersey, and with a turnover of more than £2million per year could be hit by a new 20% retail tax if the 2018 Budget is approved. It is expected to target between 18 and 20 local retailers, spanning the high street, motoring, jewellery, gardening and food retail sectors.

The move could generate more than £5million each year for the States, which would help to plug the funding gap left behind by the rejected health charge and the side-lined liquid and solid waste charges.

But even though other major companies in the highly competitive supermarket sector are likely to have to pay the tax, it seems the Co-op could be exempt, giving them a clear advantage, as its customers also own the business as shareholders - in effect, it trades with itself. As a result, the company traditionally hasn’t had to pay tax in the same way as other supermarkets because it’s judged to be a 'mutual'.

President of the Co-operative Society Ben Shenton told Express that the Draft Budget “remains silent” on the treatment of a mutual society.

Pictured: Co-operative President Ben Shenton said that the supermarket had requested a meeting with tax officials to clarify their tax status.

“We’re treated differently for tax purposes so before zero/ten came in we were only taxed on non-mutual trading… Because we’re not a public limited company and we are a mutual society for the benefit of the shareholders, the taxation treatment isn’t always as straightforward as people might think. This Retail Tax is a new tax that’s coming in and we’ve had mixed signals from the politicians about whether we do fall under it or don’t,” he explained.

Co-op officials are now hoping to have a meeting with the Comptoller of Income Tax to clarify matters. “We’re trying to arrange that meeting asap because obviously we need to make it clear what our status is so that the public and the politicians are fully informed when the Budget debate comes up,” Mr Shenton commented.

A report by the Fiscal Policy Panel released on Friday identified retail as one of the Jersey economy’s weakest performing sectors at present. “It makes you wonder why they’re picking on retail to cover the shortfall,” Mr Shenton added.

He stated that the Co-op would not comment further on the Retail Tax until their status was clarified.