EARLIER in the year, ministers issued a discussion paper on taxation which might be introduced to complement the savings that they are promising to make through their wide-ranging review of public sector spending.
EARLIER in the year, ministers issued a discussion paper on taxation which might be introduced to complement the savings that they are promising to make through their wide-ranging review of public sector spending. The way in which the paper was presented made it quite apparent that certain measures were already clear favourites and that others were definite also-rans.

Anyone who took the trouble to study the discussion paper will not be surprised by the fiscal proposals in the draft Budget statement for 2011. The statement, made public today, together with expenditure proposals for 2012 and 2013, reveals that Treasury Minister Phillip Ozouf will be asking the States to approve a two per cent increase in GST to five per cent, plus the introduction of a two per cent levy on social security payments above the present ceiling for both employees and employers.

Against the background of promised cuts and promised tax increases, the Island has, for many months, been bracing itself for bad news. However, although the proposed measures are clearly an element of that bad news, Senator Ozouf will argue, with some justification, that it could be worse and that what is now on the table represents a fair way of helping to raise the sums that are necessary if future budgets are to be balanced. In the draft document, he also says that international businesses should be required to play its part through paying higher fees, a measure which would raise £3 million in additional revenues.

Unfortunately – at least from the Senator’s point of view – a great many Islanders will be far less sanguine about the proposed rise in GST and the proposed change in social security rules. Some might also wonder if the extra £3 million that it is proposed should be extracted from international businesses amounts to a sufficient levy from such a wealthy sector.

In the case of GST, there will be two concerns. The less well off, and those who consider the plight of the less well off, will be wondering if the promised ‘compensation’ will provide effective protection for those on low incomes. The additional two per cent will also be seen as only the thin end of the GST wedge.
The extra social security levy, meanwhile, will be a further blow to be endured by middle Jersey, that sector of the community which is already reeling under the growing pressure of 20 means 20 taxation.