Treasury Minister defends new retail tax

Thursday 09 November 2017

Jersey's Treasury Minister has refused to rule out extending plans to tax some large retailers at 20% to other sectors as well - but says he has no plans to do so.

Senator Alan Maclean is hoping to 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 - as outlined in his draft 2018 Budget.

The proposal was met with strong opposition, with leading local business figures including the owner of Voisins and UK fashion guru Tessa Hartmann, saying it will hit shoppers' baskets and is the opposite of what Jersey should campaign for: "financial incentives and a welcoming economic climate."

Speaking at a Chamber of Commerce lunch, Senator Maclean was asked by Gillian Martindale-Parsons, the Chief Executive of the Chamber of Commerce, to give assurances that if the States agreed "...the 20% retail tax, that won’t then be rolled out to other sectors of commerce."

The Treasury Minister first noted that the retail industry wouldn't be the first sector to pay 20%, saying: "People talk about our corporate tax being 0 – 10. In fact it is already 0-10-20. We have Jersey utilities companies already paying 20%, property development companies, on-island quarrying companies. This might lead you to believe that we are going to extend, and extend, and extend."

Pictured: The Treasury Minister said that some sectors already paid 20%, including development companies.

He assured the audience that a lot of work had gone into bringing the proposal forward - the main area of concern was the fact that Guernsey introduced a £500,000 profit limit, with any additional made over it being taxed at 20%. Jersey's Treasury Minister opted for a sliding scale from 0 to 20% for taxable profits between £500,000 and £750,000.

He added: "We were very careful before making this proposal, it was signalled over a year ago that it was being looked at. We were very conscious we didn’t want to put at risk our 0-10 corporate tax structure. In order to maintain the integrity of our corporate tax structure, it is absolutely critical that we maintain the fact that the majority of businesses on the island, and the majority of tax, is at a 0% rate. We have got to be very careful.

"That doesn’t leave much scope to introduce more businesses and more sectors. We had to be certain and collect the data before introducing this particular measure that we weren’t going to attract the attention the EU Code of Conduct Group in this particular area. We are satisfied that this isn’t the case. We are not anticipating any great additional sectors being introduced at a 20% rate."

After being prompted to state whether he was ruling out the possibility to tax other sectors, the Treasury Minister said: "I am not ruling it out because I think it would be very unwise to stand here and rule anything in or out. All I can do is give you the facts and the facts are that it is unlikely that we will be growing it much further, unless there was a change in the corporate tax structure, full stop. That is an entirely different thing, that is not what is being considered, that is not something that is on the table.

"We have got our own scope to extend it, it’s already been extended in the areas I have mentioned and I think we have now reached a balanced position where we extended it to some of the financial services businesses which is aligned much more with other jurisdictions like Guernsey and the Isle of Man."

The 2018 Budget is set to be debated in the States Assembly at the end of the month.