Playing fair on the tax front

Although the issue was ignored in the recently tabled Budget, it is now clear that much work has been undertaken behind the scenes – without fuss, fanfare or progress reports.

As a result, Treasury Minister Philip Ozouf has been able to issue a paper analysing the present situation and presenting certain options for change. Unfortunately, as the paper points out concisely and compellingly, there is no ‘silver bullet’ which, if fired, would solve what, for many, remains the knottiest problem afflicting the Island’s tax regime.

To begin with, the submission on non-resident taxation explains that we already benefit from the operations of companies in this category. They provide employment, pay social security contributions, collect GST and return it to the exchequer, and the salaries and wages of their employees are taxed. Quite clearly, we cannot afford to frighten away present traders or deter new inward investment.

The submission also outlines the potential pitfalls of introducing new charges for companies owned beyond our shores. Again, deterrent effects could be significant. Furthermore, the ‘level playing field’ to which the EU attaches great importance might mean that all businesses, locally owned or otherwise, would have to be subject to new charges such as higher rates or a commercial property levy.

But complex and fraught with difficulty though the situation undoubtedly is, there will, in many people’s eyes, be something fundamentally perverse about some companies’ lack of liability for Island tax. EU talk of level terms and non-harmful tax practices rings very hollow indeed to the citizens of middle Jersey who have seen their tax burdens increase steadily as those of some major traders have been cut to zero.

It is hard to resist the impression that the EU’s much-vaunted vision of fairness does not extend to grassroots level.

As so often in the entwined fields of politics, economics and public finances, the way forward – if one can be found – will be through adjustments to the system rather than radical reform. Many Islanders would no doubt still like to see the nettle grasped firmly, but the answer must be to pick at it delicately and circumspectly without getting stung.