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Zero-ten success story
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Finally, however, the EU has confirmed that zero-ten now meets the requirements of the code of conduct designed to stamp out harmful tax practices and the critics have been confounded.
True, acceptance of the system that is at the heart of our business taxation strategy meant that one of its elements, ‘deemed distribution’, had to be abandoned, but that was a minor sacrifice. Confirming that shareholders will not be taxed on dividends that they have not actually received was a small price to pay to avoid having to redesign business tax mechanisms.
Reaching a satisfactory zero-ten conclusion is in itself a reason for celebration, but it is also clear that many real benefits will now accrue from the EU’s decision.
As Treasury Minister Philip Ozouf points out, this signals the beginning of a new phase of stability and predictability which will suit the needs of the finance sector, spur new business activity and feed new revenues into the public purse.
In other words, even if zero-ten appears to be an abstruse and technical issue of limited interest to the non-specialist, its acceptance will produce positive results for the man in the street as well as for the corporate world.
At another level, the end of the zero-ten controversy will allow senior politicians and their advisers to focus on other matters.
Generously, Senator Ozouf has paid tribute to former Chief Minister Terry Le Sueur, who stuck to his guns while so many around him were insisting that government’s tax strategy would fail. The Island certainly owes Mr Le Sueur a debt of gratitude, but that also extends to Senator Ozouf, who backed the Chief Minister to the hilt and was equally adamant that we were on the right course.
Meanwhile, Senator Ozouf has said that the EU seal of approval for zero-ten has the same importance as the negotiation of the 1970s which saw Jersey presenting a plan which allowed it to remain outside what was then the Common Market. It remains to be seen whether this is the case, but we should be in no doubt that an important watershed has been successfully reached.
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