"Sexist" tax return rules set for a revamp?

Friday 17 March 2017

“Outdated” tax return rules whereby wives need their husband’s permission to discuss their tax affairs, but not vice versa, could finally be stamped out under a new system.

After years of calls to update the system in which husbands are taxed on both their income and that of their wives, which was branded as “archaic” by Deputy Geoff Southern back in 2012, the Taxes Office pledged to undertake a review of couples’ taxation in the 2017 Budget.

According to a States spokesperson, the review will assess two main options for taxing household income: independently taxing adults, or taxing on a partnership basis, taking no account of a person’s sex or type of partnering.

Both options, they confirmed to Express, would also remove the need for a wife to get her husband’s permission to deal with joint tax affairs.

Such a change would also impact civil partnerships, in which the older partner is currently taxed on the income of both. However, if same-sex marriage comes into force before household taxation rules are revised, the States Assembly could be left with a difficult decision on how to proceed.

Pictured: Cyril Le Marquand House, where the Taxes Office is located.

Reform Jersey politician Deputy Sam Mézec described the current system as, “outdated and, frankly, sexist”.

“I think there is more or less a consensus that the way forward is for all Islanders to be taxed individually. That is clearly the fairest way to tax people.

“The problem, as with any tax change, is that there will be winners and losers. In some cases those losers could be middle earners and some winners could theoretically be very wealthy couples,” he said.

A couple in which one earns £100,000 and the other £14,000 would currently pay around £22,800 tax. However, if taxed individually, the higher earner would pay £20,000 while the lower would qualify for marginal relief and therefore would not pay a penny of income tax. That means, despite their joint income of £114,000, they would be due for a tax break of £2,800 under a new system.

Pictured: Deputy Sam Mézec of Reform Jersey called for a revamp of the current "outdated" system that won't squeeze middle earners.

Deputy Mézec added: “The principle is absolutely right, but there is some difficulty with applying it and making sure that the right people are hit and the wrong people don't get unjustified breaks in this time of austerity.

“Ultimately, this is made more difficult by having an unnecessarily complicated income tax system and we'd be better off simplifying it, getting everyone on the same regime and targeting allowances more effectively to make sure that lower earners are helped, the middle aren't squeezed and high earners pay their fair share.” 

Before any changes are agreed, the Tax Policy Unit are building a statistical modelling tool to measure the potential impact of independent taxation.

Even after options are assessed and agreed, taxpayers won’t see any change before 2020 at the earliest so that a new tax computer system can be put in place.