KEY votes in the States Assembly today could lead to a major shake-up of Jersey’s 2(1)(e) scheme, which gives so-called ‘high-net-worths’ special residency and housing rights – plus preferential tax status.
Treasury Minister Ian Gorst has brought forward a proposition to increase the minimum tax paid by new high-value residents (HVRs) to £250,000, potentially boosting public coffers by £1.2 million a year.
Previously, those wishing to apply for high-value residency had to contribute a minimum of £170,000 in income tax.
Deputy Gorst is also calling for the minimum property purchase price to rise to £3.5 million for houses and £1.75m for apartments – currently £2.5m and £1.25m respectively.
Also up for debate is Deputy Lyndsay Feltham’s proposition, lodged last month, which calls for the suspension of the government scheme until their ‘unfair’ preferential tax rate is axed.
Currently, HVRs pay 20% on their first £850,000 of income, and 1% on all worldwide income over £850,000. A licensed resident, by contrast, would pay 20% across the board. Deputy Feltham has also asked that a ‘full and comprehensive cost-benefit review’ should be undertaken of the 2(1)(e) scheme.
Ahead of the States vote, Chief Minister Kristina Moore has published a comments paper responding to Deputy Feltham’s proposal, saying that while the government was happy to increase the minimum tax requirement for HVRs, ministers felt removing the 1% tax provision as proposed by Deputy Feltham ‘would negatively impact revenues’, resulting in Jersey losing out to competing jurisdictions.
Deputy Moore said: ‘Jersey has an enviable natural environment, a safe and vibrant community, given our size, excellent transport links to the United Kingdom, good public services and a critical mass in some of the key industries, notably wealth management, which attract many 2(1)(e) applicants.
‘This means we can operate at the higher end of the market in terms of tax, applying strong due diligence. However, there are limits to our attractiveness, and we must remain competitive overall.’
She added: ‘We should be positively welcoming and supportive of new migrants who move to Jersey wishing to become part of our community, including those who are wealthy.’
Deputy Moore said while she agreed ‘all policies should be subject to ongoing review, assessing costs and benefits’, this ‘should not be at the cost of perpetual uncertainty’ and therefore she could not support another review.
