Personal taxation rates in Jersey to stay the same but calls mount for the rich to be taxed more

News - Tax

Written by Ray Clancy

Friday, 29 October 2010 10:50

Jersey does not plan to increase its personal taxation rate of 20% or to tax the rich more despite having to make financial spending cuts.

Jersey Finance has welcomed the Jersey’s Council of Ministers’ proposals to retain the jurisdiction’s personal taxation rate at 20% as it is an important part of the channel island’s economic success.

The retention of the personal tax rate at 20% is included in the Budget Proposals for the three year period from 2011 to 2013. The rate has remained unchanged since the beginnings of Jersey’s finance industry

Setting out his budget proposals, Treasury and Resources Minister, Senator Philip Ozouf said that Ministers wanted the States of Jersey Assembly to send out a powerful message that it would maintain the 20% rate, describing it as one of Jersey’s key elements of stability and economic success for more than 60 years. The proposals will be debated by the States Assembly on December 07.

‘The Council of Ministers’ proposals provide the reassurance and certainty that investors need and will be particularly welcome to those finance professionals that might be considering re-locating to the jurisdiction. There had been some unfounded speculation that the Council was considering increases in personal taxation, but this announcement is quite clear in that regard,’ said Geoff Cook, chief executive, Jersey Finance.

However, the budget proposals include a rise in the channel island’s Goods and Services tax which is likely to be very unpopular. When it was first introduced in May 2008 there were protests with thousands of islanders filling the Royal Square and a petition signed by 19,200 people.

Ozouf said a rise from 3% to 5% in GST is needed to balance the books. It is estimated that will bring in an extra £30 million a year. But because it is often claimed GST hits those on lower incomes hardest it is planned to give £2 million back in subsidies.

He also wants to raise another £16 billion from those earning over the Social Security cap of £44,000 who will face a 2% charge from next year. Ozouf believes that is fairer than lifting the cap.

Critics say that Ozouf should tax the rich more. But he pointed our that the Treasury is compiling a report on 1.1.Ks, the island’s wealthy residents and is awaiting the European Union’s verdict on Jersey’s zero ten tax policy and if it meets international standards.

Jersey Deputy Montfort Tadier believes the island should tax businesses more. ‘One shouldn’t have taxes ideally on workers and on consumption. It’s not right, those who can afford to pay should pay. It’s really about taxing business, taxing corporations rather than necessarily taxing individuals who need that money to survive,’ he said.