NEW allowances will ensure that couples are not negatively impacted by the move to independent taxation, Assistant Treasury Minister Ian Gorst has said.
He spoke out after a campaigner this week claimed that some couples could see their bills rise by as much as £3,000 per year.
The policy of joint taxation – sometimes known as married man’s tax – was changed in September 2021 to require anyone arriving in the Island in 2022, or who then gets married or becomes a civil partner, to be independently taxed.
A proposition to bring the change into effect for all Islanders will be debated later this year.
Campaigner Luke Deacon said the draft legislation would see some couples, particularly those with children where one spouse earns below the income tax threshold, or those where one partner is unable to work, paying more.
He said that although affected Islanders would receive compensatory payments in the short term, these would be reduced over time.
In a statement Deputy Gorst said that ministers were committed to ensuring Islanders were not affected by the changes.
“The claim in yesterday’s JEP that some taxpayers will see a rise of £3,000 in their tax bills from independent taxation is inaccurate, because of the introduction of the compensatory allowance,” he said.
“The compensatory allowance is in place to ensure that couples aren’t negatively impacted by independent taxation and will provide a smooth transition over the coming years.
“The allowance can only be withdrawn when the States Assembly is satisfied that it is no longer required. Ministers are aware of the importance of managing this transition fairly and effectively, and are committed to doing so.”
Asked whether the government accepted that significant numbers of lower-earning Island couples would, in the long term, pay higher tax bills once the effect of the compensatory allowance had reduced, Deputy Gorst said: “The majority of taxpayers will see no change to their tax bills.
“Reports to the States Assembly have identified that about 6,800 couples – married and resident before 2022 – could be worse off had independent taxation been introduced overnight and the compensatory allowance is there to help them.
“It is a ‘grandfathering measure’ which provides a gentle landing into independent taxation over the coming years. The government is committed to managing this transition effectively and ensuring fairness in the taxation system. This allowance can only be ended when the States Assembly is satisfied that it is no longer needed.”
Deputy Gorst said the move to independent taxation was supported by the majority of Islanders and aimed to eliminate discrimination against married women.
He described the compensatory allowance as “a financial buffer over several years to ensure fairness and align taxation for all couples over time, similar to changes made in other jurisdictions”, and said that the introduction of independent taxation would actually cost the Treasury £4 million “in the short run”.
Meanwhile, Deputy Louise Doublet – who has lodged an amendment to the draft law removing the right of couples to continue to file joint returns – stressed that the amendment would have no impact on the figures or the amount of tax calculated but was “purely about form-filing and access to/control of financial information”.
