THERE are no plans to raise taxes in Jersey, the Treasury Minister has said after the UK Chancellor unveiled his budget measures.
Deputy Ian Gorst also said further measures to assist Islanders struggling with the cost-of-living crisis would be kept under review.
Yesterday, UK Chancellor Jeremy Hunt delivered his autumn statement, which will see millions being forced to pay more in tax as the rate of inflation spiralled to 11.1% and interest rates continue to increase.
Deputy Gorst admitted that 2023 would be a ‘turbulent year’ for many but that Jersey’s finances remained in a strong position compared to many other jurisdictions.
As thousands of Islanders face crippling hikes in mortgage repayments as a result of the spike in interest rates, Deputy Gorst hinted that the withdrawal of mortgage interest tax relief could be halted. He replied ‘watch this space’ when asked whether changes could be brought to the Government Plan, which is due to be debated next month.
The scheme, which enables Islanders to claim tax relief on loan interest payments for the purchase or extension of their main property, was cut as part of the 2016 Budget and is due to be phased out completely by 2026.
Deputy Gorst said: ‘There is a cost attached to it. The officers are seeking to understand how any changes there could be funded. If there are to be changes they would be brought forward as part of the Government Plan.’
The Treasury Minister reiterated that a proposition from Deputy Raluca Kovacs to remove GST from food would not be supported and that any changes to the 5% rate would need to be funded.
‘If we were to take food out of GST one of the options for it is to increase the rate. I don’t want to do that,’ he said, adding that there would be no guarantee the reduction in tax would be passed on to consumers and that removing GST from food would not provide direct help to Islanders.
He added: ‘We are very mindful that some Islanders are finding the cost-of-living crisis very difficult. If we are to bring other measures there will be difficult decisions to make.
‘We are not proposing to bring forward tax increases.
‘The only long-term issues where we need to think about funding, as we have known for a long time, is health and delivering a fit-for-purpose health service.’
Deputy Gorst added that Jersey was in a ‘very different place’ to the UK in that the Island has a balanced budget but said any reduction in inflation or interest rates as a result of the Mr Hunt’s autumn statement would be beneficial to Jersey.
‘The measures, they hope, will alleviate the pressure and need to increase interest rates as a mechanism to reduce inflation. If the UK budget does reduce inflation and helps keep a lid on interest rates then that is ultimately positive for us,’ he said.
‘We are in a different place to the UK. We have tried to manage our finances carefully. That is one of the reasons I was against lots of borrowing. We will have paid off Covid debt by the end of 2022 and that adds to our stability.
‘We remind ourselves of our key economic aims which is stability, affordability and sustainability as we go into what will be a turbulent year in 2023.’
In September, the States Assembly agreed to a £56.5m package of measures designed to help Islanders tackle the cost-of-living crisis. At the time, Deputy Gorst refused to rule out further measures in addition to the mini-budget if they were deemed necessary.
‘I think we have known for a number of months now, particularly with the turbulence in the UK and the war in Ukraine, that there are known economic conditions that would be challenging and difficult. Hopefully, we have shown that through the quick action that we have taken in the mini-budget we will listen to Islanders’ concerns and will continue to do that through 2023.
‘If we are to take measures because they are necessary then we will have to find the corresponding changes in expenditure. That will be a balance we have to make.’
