Minister criticised over her tax payment proposition

THE Treasury Minister has come under fire for asking the States to approve proposals to move all Islanders to paying tax on a current-year basis without discussion of the long-term financial impact on Islanders.

St Clement Deputy Susie Pinel                                                             Picture: ROB CURRIE. (29270808)
St Clement Deputy Susie Pinel Picture: ROB CURRIE. (29270808)

The criticism has been voiced by former Senator Ben Shenton and chief Scrutineer Senator Kristina Moore.

Deputy Susie Pinel lodged a proposition for debate in November, calling for all 45,000 residents paying income tax on prior-year earnings to move to a current-year basis.

She initially announced the controversial plans in July, claiming that the move would assist those whose income had dropped this year due to the Covid-19 outbreak and help modernise the Island’s taxation system.

At the time she said that those who are moved – two-thirds of the Island’s income tax base – would have their 2019 tax liability deferred until 2023, with a repayment programme potentially taking place over several years.

The minister’s proposition does not contain any details of how the repayment of the 2019 liability would take place, however, with the matter not due to be debated until March 2021.

Mr Shenton, who lodged a petition calling for the 2019 liability to be written off if the plans go ahead, said that the States was being asked to approve something without any idea how it will financially impact the community.

‘The proposition does not deal with repayment options. These are to be covered by the regulations, which will not be debated until March 2021,’ he said. ‘Members are being asked to pass something in principle without any consideration of the financial effects on the community they represent.’

He added that he felt his petition, which gained more than 5,000 signatures – the benchmark for consideration for States debate, should be tabled before the Treasury Minister’s proposals.

‘Certainly the petition is not covered by P118/2020 [the proposition] and should be debated before both P118/2020 and the later regulations,’ he said.

‘In truth the repayment parameters should be included within the core Treasury proposition, so Members better understand both what they are voting for, and the social and economic implications of their vote.’

The Treasury Minister has said previously that Mr Shenton’s proposal to write off the 2019 tax year would cost the public purse £320 million.

Senator Moore, chairperson of the Corporate Services Scrutiny Panel, also said that she was concerned that the proposition ‘does not touch on the issue of repayment’ and that she could take further action over the matter.

‘In a recent hearing the minister suggested that she was considering freezing 2019 liability until 2025,’ she said. The lack of clarity on this key point is very surprising. The proposition states that the regulations will be brought in March 2021 to deal with repayment.

‘Our role is to hold an objective process of scrutiny. We will certainly consider this matter and will make a recommendation to the minister.’

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