The proposals, put forward by Treasury Minister Susie Pinel, mean that the 2019 liability of Islanders who pay on a prior-year basis will be suspended and repaid over the course of a period of up to 20 years. The exact details of how Islanders will pay are due to be debated and confirmed within the coming months.
Around two-thirds of the Island’s tax base – 45,000 people – pay on a prior-year basis.
The proposition was passed in the States by 42 votes to two. Deputies Jeremy Maçon and Kirsten Morel voted against the proposals, while Senator Sarah Ferguson abstained. It followed a climb-down from the Treasury Department, who initially proposed that unpaid tax would have to be paid off after five to ten years. However, a petition lodged by former Senator Ben Shenton – which gained 5,681 signatures – caused the department to change its position.
Speaking during yesterday’s States sitting, Deputy Pinel said if her proposition was not passed it would prevent 8,000 prior-year taxpayers deferring their tax payments and overwhelm Revenue Jersey with inquiries from Islanders not able to meet their obligations.
‘If we pass this proposition today and give it immediate effect by acte operatoire,[correct] then many Islanders will immediately financially benefit from keeping money in their pockets. It will reduce financial stresses on many Islanders, of whom many will not have yet realised the implications of what reduced income during 2020 will have on their 2021 ITIS effective rates. They will most likely go up if we do not provide this easement. Details of payment options is for future debate on draft regulations,’ she said.
‘Despite the unprecedented impact on our economy it is the case that some prior-year-basis tax incomes have increased in 2020. The move to current-year basis would necessarily result in increased ITIS effective rates for them and I want to assure those States Members that those whose incomes have increased during the pandemic would be able to spread out the increased rate over a longer period than usual – in order that they are not unduly affected by the proposals.’
However, many States Members raised concerns over the proposals, with some saying that it had been rushed and that it could overwhelm tax officers.
One of those, St Martin Constable Karen Shenton-Stone, said: ‘There is no detail [to show] that Revenue Jersey – which we all know is struggling to produce a service that is fit for purpose – will be able to cope with these changes.With everything to do with tax the devil is in the detail. We do not have this detail. We need this detail.’
‘I am therefore in a dilemma. Do I therefore support a draft law that is clearly incomplete, as there are beneficial changes but there is no way that these could have been researched fully in such a short space of time, or do I vote against this proposition in the hope that a future proposition will be brought before this assembly?’
However, Economic Development Minister Lyndon Farnham asked States Members to ‘stop kicking the can down the road’ and take the pressure off many Islanders who were growing increasingly anxious about their tax liabilities.
‘If we always have to include every single detail before you begin, then we will never begin and we will never achieve anything,’ he said.
‘The process we follow here is an agreement in principle and then a sequential process of further approvals. The process we have in place with future government plans – we have every opportunity to approve what we have done and further opportunities to improve what we have done and we must do that year after year.
‘I do not think this is perfect but it is a good solution and I think we should support it.’
Assistant Chief Minister Richard Buchanan meanwhile said that many Islanders – especially those who were self-employed – were cash- strapped and the proposition would help to ease the liability that was ‘looming over them’.
