Later this month, Treasury Minister Alan Maclean’s proposal to tax Island retailers that make a profit of more than £500,000 at a 20 per cent rate are due to be debated by the States as part of his 2018 Budget.
Currently, under Jersey’s zero-ten regime, all retailers, as well as many other businesses, pay no corporation tax.
Senator Philip Ozouf, who stepped down as Assistant Chief Minister earlier this year and is now a backbencher, has lodged a Budget amendment calling for the levy, known as the ‘retail tax’, to be reduced to ten per cent.
To make up the expected shortfall of £2.8 million which would result, the Senator proposes:
- Reducing the duty-free allowance for cigarettes from 200 to 40 cigarettes to raise £1.5 million.
- Setting a ten per cent corporation tax rate on bookmakers, who currently pay nothing. The report says this would raise £250,000.
- Also applying a ten per cent rate to liquor vendors, who also pay nothing at present, to raise an estimated £450,000.
- Introducing a new stamp duty rate of ten per cent for residential properties worth more than £10 million sold to new arrivals in the Island. The report says that the amount raised by this measure would be variable.
The report accompanying Senator Ozouf’s amendment says that taxes charged on companies are always eventually passed on to shareholders/owners, company employees or consumers.
It says: ‘I am gravely concerned that the result of this additional tax will be higher prices. The Treasury conceded this.
‘On page 143 of their Budget documents they state: “If fully passed on in prices, a 20 per cent tax on profits would add only one to two per cent to the costs of goods sold by the retailers affected”.
‘The research that I have undertaken is that the prices of goods sold by the companies affected, if the 20 per cent rate would be adopted, would be in the region of three per cent.
‘That is equivalent to an additional three per cent GST for those customers who would continue to shop at those establishments.’
Senator Ozouf has also lodged amendments to the Budget calling for the Treasury Minister to:
lRequest that the Chief Minister asks the competition watchdog to investigate the competitiveness of the liquor trade in Jersey.
lEnsure that co-operative organisations are not also charged income tax if they they become subject to the new retail tax.
The Budget is due to be debated on 28 November.
