HANDS up if you know what the 2018 UK corporation tax rate is? Actually there are much more important things in life to know than this, but if you are in the Treasury Department or the Council of Ministers it’s probably good if you do know. It is 19% – reducing down to 17% in 2020.
So I am more than a little mystified that there is an intention to introduce a corporation tax rate of 20% on the retail sector, especially as it is intended to catch UK retailers with branches in Jersey.
You see the higher rate will incentivise them to book their profits in the UK, and they can do this by loading their Jersey costs. Why would you want to generate profits in the jurisdiction with the highest tax rate? As it stands the tax will never pull in anticipated revenues, and it will simply kill investment in the retail sector.
So how did they decide on a 20% corporation tax figure? Surely they did not base it on the fact that is was a nice round number, or the belief that 20% is set in stone, regardless of what is happening elsewhere?
Because accounting is quite fluid, the corporation tax rate must be both appropriate and competitive if it is to attract profitability from entities that span more than one jurisdiction. A 10% rate could actually pull in more tax than 20% as it incentivises companies to book profits through Jersey.
You get the impression that current tax policy is piece-meal, random, and lacks any semblance of logic. Surely someone questioned the fact that the tax rate was higher than the UK?
I get the impression that no one did. Retail tax, waste tax, health tax – what next?
Changing the subject I note that the States credit card furore continues to bubble away.
Politicians are not, quite rightly, employees of the States. They are independent and self-employed. As such they have no employment contract and no right to hold a States credit card.
How can you breach the terms under which something is issued if you are not subject to them? In my view it is the issuance of the card in the first place that requires scrutiny. Which civil servant signed it off, under what controls, and under whose political authority? Have they withdrawn all other cards to politicians?
Urgent answers required.
