A RAFT of measures – including a three-month extension to the planned cut in social security contributions – are being proposed to help Islanders struggling with the cost-of-living crisis.
The proposals – which have been lodged as amendments to the government’s mini-budget – also include a two-year freeze on rent increases and an end to the ‘20 means 20’ rate of personal tax.
The amendments will be considered when the Assembly convenes later this month to debate the mini-budget announced recently by Treasury Minister Ian Gorst and Social Security Minister Elaine Millar.
Under ministerial proposals, income tax thresholds would be increased by 12%, including child allowances, additional allowances and child care tax relief. Social-security contributions would drop by 2% from October until the end of the year and a number of benefits would be increased.
Several amendments have now been lodged – the majority of which have come from members of Reform Jersey.
In his amendment proposing to freeze rent increases, Deputy Sam Mézec said: ‘The only way to be sure that tenants are protected from extraordinary rental inflation is to impose a ban on rent increases and introduce protections for tenants from having their tenancies ended to get around this ban.
‘There is a risk that if no real action is taken to protect tenants from extortionate rent increases now, they will feel no benefit from the rest of the measures.’
The Reform Jersey party leader has also lodged a separate amendment calling for an end to the 20% rate of tax. Instead, he is calling for all Islanders to be moved to a 25% tax rate, but with the benefits and breaks allowed for those currently paying on the marginal rate maintained. He said this would see the top earners pay slightly more, while lower and middle earners would receive an additional tax break.
‘Most taxpayers are marginal-rate payers. Every taxpayer with a tax liability currently between 1% and 19% will see their tax reduce as a result of this proposal. This will see more money put in their pockets to assist them in affording their increasing bills and expenses,’ he said.
He added that agreeing to such a move would put £12.1 million in additional revenue into States coffers while also helping those struggling the most.
Deputy Catherine Curtis has lodged a further amendment which, if approved, would extend the 2% cut in social security contributions by three months until March 2023. In her amendment, she said: ‘The proposed temporary reduction in social-security contributions will end at the most expensive time of year. January is the time of year when households are more likely to have overspent and get into debt. The increasing cost of heating will also make January, February and March a more expensive time than spring and summer.’
Other amendments from Reform Jersey members include Deputy Lyndsay Feltham calling for the threshold under which the Community Costs Bonus – which provides support to low-income families to cover the cost of GST on food – is paid to be increased, allowing more people to claim the benefit.
Party member Deputy Tom Coles is requesting that the States introduce a new personal tax allowance to assist low-income earners.
He said: ‘The term of relative low income is defined as 60% of the median income. The 2022 median income for a full-time employee was reported as £750 per week, making the relative low income £450 per week or an annual income of £23,400. The proposed 12% increase to the tax threshold, taking the threshold to £18,550, would still leave an individual receiving a relative low income, without further deductions, liable for tax on £4,850 of their income, an amount of £1,309. This amendment would mean individuals receiving relative low income would no longer be paying tax.’
Deputy Max Andrews, an independent politician, has brought two amendments to the mini-budget. The first calls for the proposal to reduce social-security contributions to be scrapped and replaced with a 1% reduction – to 25% – of the marginal tax rate until March in a bid to avoid depleting the Social Security Fund.
He also, in a separate amendment, said government proposals to double the Community Cost Bonus from £258.25 to £516.50 were too high and a more modest 12% increase – to match inflation rates – would be sufficient. Deputy Moz Scott is also calling for a higher tax threshold for over-75s to support pensioners.
