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Retailers vow to fight Jersey ‘Tesco Tax’

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A BODY representing retailers will object to proposals for a 20 per cent ‘Tesco Tax’ on the Island’s largest shops – and claims that the move would give online retailers another unfair advantage over the high street.

Jersey Retail Association chairman David Elliott Picture: ROB CURRIE (19546262)

The Jersey Retail Association has said that the tax – which forms part of the 2018 Budget – will harm high-street businesses and could ultimately lead to increased costs for consumers.

JRA chairman David Elliott said that proper consultation would now be carried out into the possible impact of the proposed tax on the industry.

He added that while it was right that retailers paid tax, it seemed disproportionate to charge shops a maximum of 20 per cent compared with the ten per cent top rate levied on finance firms.

Online retailers would be exempt from the tax, as the majority of their business is not conducted in the Island.

Under the plans, lodged last week by Treasury Minister Alan Maclean, shops whose annual profits exceed £500,000 would be charged in a move that could increase States income by more than £5.5 million a year.

It is expected that the new tax, which follows similar schemes in the Isle of Man and Guernsey, would have an impact on around 20 businesses, including five locally owned companies. The tax, which was nicknamed the ‘Tesco Tax’ in the Isle of Man, would be charged on a sliding scale on profits between £500,000 and £750,000, at which point it would reach the maximum 20 per cent rate.

Mr Elliott said: ‘We are going to object to it but we need to make sure we do so in a proper way. We need to consult our members, get their views and also try to understand how the States and the Treasury have come to this decision.

‘We need to know how much of this money will be put back into the retail industry and why there is a difference between the other taxes and the 20 per cent on retail. Ultimately, it is less money for retailers to invest in their businesses.’

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He added that the proposed tax could damage any chance of the high street remaining competitive against online retailers.

‘We are all trying to be competitive but if we are being taxed and online aren’t then that is another major disadvantage.’

As well as being exempt from the potential new tax, online retailers are also exempt from being charged GST on imported items under £240. This exemption is not available to high street stores.

Mr Elliott said that the arguments for lowering the £240 threshold were ‘well rehearsed’ and Island stores had always been met with resistance to lowering that value and capturing more online retailers in the GST scheme.

The 2018 Budget proposals are due to be debated by the States on Tuesday 28 November.

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