Deputy Susie Pinel is proposing to increase duty on petrol and high-strength alcohol, in part to address this shortfall as well as to achieve health and environmental objectives.
A total of 6p is due to go on the sale of petrol and diesel, with 4p going to the States’ climate-emergency fund and 2p going to the Treasury if Members approve the Government Plan next week.
However, Deputy Pinel (below) said further rises may be needed, with States financial forecasts showing the department could expect to take £2 million a year less as a result of fewer people smoking – slashing the amount of tobacco duty the government takes.
Increases on tobacco have regularly been described as a health measure designed to prevent smoking.
Deputy Pinel has not ruled out increasing GST in the future or introducing a UK-style vehicle tax – an idea which has been put forward by Deputy Rowland Huelin in a recently lodged proposition.
‘Because the tobacco sales have gone down considerably, which is good from a health point of view, we need to compensate for that,’ she said.
‘We made a point in this budget that there would not be a tax increase – if you exclude impôts.
‘There has been a car tax or car charge that has been talked about, including within Deputy Huelin’s proposition, but there has not been any work done on that – it is not something that we would be able to do without consultation with DVS, businesses and the public too.’
Asked if impots rates would have needed to go up by the same extent if a £2 million shortfall in tobacco revenues had not been predicted, Deputy Pinel said: ‘No, probably not. We only need to balance the books, we are not looking to make a profit.’
However, she also noted at the same time that four pence of the six pence increase in petrol and diesel impot duties was being used to generate £5 million for the climate-emergency fund.
According to the Government Plan, the cost of a bottle of high-strength alcohol is due to go up by 10.9% above inflation – approximately between 40 and 50p.
However, low-strength alcohol, such as beer and wine, will only be subject to duty increases in line with inflation.
Deputy Pinel admitted that the 6p fuel rise would be ‘quite a hike’, but that the majority of the money would go towards the climate-change emergency, while extra money would be raised through hikes on spirits which she said were ‘increasingly being used by young people to binge drink’.
When asked about potential GST rises, Deputy Pinel said: ‘There is a chance, absolutely. It is one of the lowest jurisdictions for GST or VAT and it is perceived to be the fairest tax.
‘There are about 33,000 people in Jersey who do not pay [income] tax at all, but they would be paying GST. Also, people who come here as visitors pay GST – that seems to be the fairest way of doing it.
‘We do need to consider it but no work has been done on it to date.’
Deputy Huelin has lodged an amendment opposing raising duty on alcohol and says that road fuel duties should be increased instead.
According to Deputy Huelin, if an additional 2p was put on the price of diesel and petrol it could generate £922,000.
He adds that 20p could be put on marine fuel – which is currently not taxed – to raise £168,000.
But, according to his amendment, Treasury have estimated that even after these measures, there would still be a shortfall in 2020 of £1.05 million.
As a result, Deputy Huelin is proposing addressing this with £1.05m from the general reserve fund – before introducing a UK-style vehicle tax for large-engine high-emission non-commercial vehicles in 2021 to replenish the reserve. He estimates that the charge could raise over £5 million each year.
However, Deputy Pinel said she disagreed with Deputy Huelin’s amendment, adding that the tax on marine fuel had not been properly costed.
Assistant Treasury Minister Lindsay Ash, who has regularly campaigned against increases in alcohol duty, said that if the States were ‘serious about their aim to become carbon neutral’ by 2030, the shortfall in tobacco revenues should be addressed through higher petrol and diesel duties.
