GST rise to help pay for Covid ‘not off the table’

GST rise to help pay for Covid ‘not off the table’

Jersey is currently forecast to spend £400 million by next year due to the pandemic, while a further £400 million is expected to be lost in tax revenue between 2020 and 2023.

The Chief Minister said that previous remarks he had made about raising revenue by increasing GST to 7% or 8% were ‘illustrative’ but added that nothing, including a hike in the sales tax, was off the table.

During a recent Scrutiny hearing, Senator John Le Fondré said: ‘The point I made around GST was very much illustrative because the issue was we will have debt and we have to make sure that we have a measure of paying for it,’ he said.

‘And the argument that I was floating at that point was that if we didn’t go down the PYB route, you still had to find some measure to repay that. Usually there are only one or two ways, which are you either raise revenue – and I gave the illustration of what that might look like – or you’re cutting expenditure. And that means seriously cutting expenditure.’

Senator Le Fondré said that there was ‘very clear advice’ from the government economic advisers, the Fiscal Policy Panel, to not raise taxes next year while the Island was recovering from the economic shock of Covid.

Following that, he said, ‘nothing’s off the table’ at this stage, including new digital taxes that could be introduced internationally.

‘Everything’s on the table. And we’re not going to say that we’re not intending to be looking at an increase in GST,’ he said.

‘We do know we have other areas that we have to consider. One is going to be the impact of the discussions at the OECD level on what’s referred to as digital taxation. That will determine actually what happens going forward.’

The OECD (Organisation for Economic Co-operation and Development)released a digital tax framework earlier this year, with the aim of allowing governments to collect more tax from internet-based firms in the jurisdiction where they do business. This could affect online giants such as Amazon and Facebook.

The Chief Minister also suggested that employers or companies could be asked to pay more in social security contributions.

‘When zero ten came in, the balance on corporate taxation shifted quite significantly towards personal taxation,’ he said.

‘Essentially at this stage, there are still some factors that will have to be taken into account during the course of next year, which will then influence the potential outcomes that we need to look at.

‘One of those will include – and we’ve identified it as a piece of work – whether the taxpayer is overly subsidising the Social Security Reserve Fund in favour of corporate entities.’

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