Tax relief move will hit us hard
Tuesday 2nd December 2008, 3:00PM GMT.
From James Woodhouse.
I WAS pleased to see that Deputy James Reed is planning to propose changes to the ‘20 means 20’ legislature, and I hope that the States will show sympathy to the majority of the taxpaying population who will be hit by this law.
When the States last tried to remove the tax relief on mortgage interest, the Town Hall was so full that there had to be a second night so that everyone could get a chance to air his or her questions. As a result, the States backed off. This time, they will sneak it in via ‘20 means 20’ with remarkably little fuss from the public.
Why is this? People never stop complaining about GST, but for many people (especially first-time buyers with large mortgages relative to their income), 20 means 20 will have a much larger impact. Twenty per cent of the allowances have been phased out already, with more to go over the next four years. In this uncertain economic climate, five years is not long enough for wages to keep pace and many people will find themselves in significant hardship.
In a best case scenario, people’s disposable income will be drastically reduced and they will have to economise. This will hit shops, bars and restaurants badly, but it will also affect small businesses such as gardeners, small builders, window cleaners, home helps and so on. The knock-on effect as people tighten their belts will be felt across the spectrum of Islanders.
Why are people accepting this without a fight? I believe it comes down to the quality of the communication from the States. If you asked Islanders ‘Why do we need zero-ten?’ and ‘What effect will 20 means 20 have on you personally?’, I suspect that you will find that a decent proportion do not understand why these changes are being made and how their finances will suffer.
I sincerely hope that Deputy Reed is successful in persuading the States to take a more sympathetic approach.
Anivle,
Clos de la Mare,
St Clement.
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One minute the states are concerned about helping first time buyers, the next they take away mortgage interest relief, doesn’t make sense. 20 means 20 will basically only hit the middle earners who drive the economy which will be greatly reduced as they will not have as much deposable income and more cautious with what they do have. Are the rich and high earners who have already made their deals with the Tax Office going to have their specials deals re assessed, I doubt it , far to difficult. They may bring wealth into the island and threaten to leave but that should not be a sufficient reason to exempt them from sharing the increase tax burden. Also what is going to be done to catch the cash in hand brigade who don’t declare their income and probably claim income support at the same time. Is it not time something was done to catch them as it is immoral to just ignore them in this new tax climate
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I should point out that Deputy James Reed voted for the zero ten Corporation Tax proposals, 20 means 20 and GST.
The fact is that moving to zero ten was a way to comply with OECD taxation rules and the resultant deficit has to be funded somehow, the States decided that introducing GST and 20 means 20 was the way forward.
The other alternatives such as reducing States spending, increasing the baseline rate of tax from 20% or introducing a higher rate band would be near impossible in Jersey.
It may be unpopular but the only way forward is for islanders to pay more tax or accept substantially poorer public services.
If we agree that we do not want an ‘economy level’ island then the question is how this burden is going to be shared between different members of the community.
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I was in a Hustings and put this to question.
2020 will hit hard in January after every one has spent all their money on Christmas and as you say no one is asking questions.
When i asked what any of the prospective candidates would do in the States regarding 2020 one of the answers in short was we have to pay taxs even if they go up.
I did not believe the candidates themselves understood 2020.
This is a ticking time bomb and even with the intervention of Deputy Reed this will hit us all in 2009.
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A huge majority of people obtained mortgages based on part of the fact that they would get interest relief.
This has already been reduced. I fail to see how people will afford to pay their mortgages without this interest relief.
It will be crash for the housing market, reposessions, and a disaster for shops abd businesses as people wont have any money to spend.
The answer is simple. STATES NEED TO STOP SPENDING OUR MONEY.
States spending of more than 1/2 Billion pounds for an Island of 90,000 is ridiculous and could be cut by 1/3 with efficiencies overnight im sure (plus reduce the hidden costs of “contract” headcount of foreign nationals).
Wake up Jersey.
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Cheery thought
James Reed’s proposal was thrown out by 32 votes to 19.
I tried to list the members who voted pour and contre on a piece of paper before looking at the list on the States website and I got 94% right.
They might as well have party whips in there now as there is now virtually no sign of the independent free thinking member left.
It is going to be a long cold spring in the high street.
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