Ministers to spring property tax plans in weeks – annual charge on the cards?

Wednesday 22 July 2015

The Treasury Minister has announced that plans for possible changes to property taxes will be out by the end of summer, after a consultation that floated annual property tax charges and windfall taxes where house values rise.

The consultation was opened just before last year’s election, but has gone quiet ever since until Senator Alan Maclean revealed in a Scrutiny hearing yesterday that proposals would be coming out in just weeks.

The original consultation paper floated the idea of replacing stamp duty with annual charges based on a property’s value – like the Parish rates systems – and potentially “windfall taxes” that would be paid when properties increased significantly in value.

The only reference to the tax changes in the financial plan put out by ministers last week was a statement that: “The Minister for Treasury and Resources will publish his plans for the Island’s property taxes later in the summer.”

That reference suggests that ministers aren’t banking on a big increase in property taxes as part of the plan to fill the £145 million deficit in public finances.

At a hearing yesterday afternoon, Treasury Minister Alan Maclean confirmed that the property tax consultation had finished and that the final report would be out soon.

The backlash to the consultation – and particularly the idea that it could lead to higher charges on renters, not owners – led to one of the most bizarre moments of last year’s election, when the minister responsible ripped pages out of the document at a public elections hustings meeting.

Senator Philip Ozouf tore out pages of the document after it was criticised midway through the election campaign.

But at yesterday’s hearing with the Corporate Services Scrutiny panel, it wasn’t clear whether that meant anything, or whether any particular element or option had been removed from the consultation.

Senator Maclean said: “The Property Tax Review covered quite a number of areas.

“It has reached its conclusion and it’s being considered at the moment, so it would be inappropriate to make public comment now. It is going to be published towards the end of the summer.”

St John Constable Chris Taylor responded, saying: “I understand at election time the document was torn up in public and the public were told it would not be continued.”

Senator Maclean: “I witnessed it being torn up by one of the election candidates, who didn’t tear the whole document up. He tore up one element. If you wanted to know the reasons, you would have to ask him.”

Panel vice-chairman, Deputy Simon Bree, asked for clarity, saying: “It will be of grave concern to many members of the public that a new property tax would introduce certain elements of possible capital gains and certainly would increase the amount of tax paid under the current Parish rates system. I think that the public would like confirmation from you as to whether or not you intend to introduce proposals for a new property tax.”

Senator Maclean responded: “It would not be my intention to predetermine the outcome of a review that’s being assessed at the moment. It’s absolutely appropriate that I assess it and consider it in a timely fashion, and then publish at the end of the summer. To make any announcement today would be wholly inappropriate, however much you would like me to do it.”