There were no tax deals with 1(1)ks

Saturday 30th October 2010, 3:00PM BST.

From Colin Powell, States adviser, international affairs.
YOUR editorial headlined ‘Is the 1(1)k system broken? (JEP 21 October), which is critical of those paying tax of less than £10,000, appears to have been written without due regard for the content of the paper on the history of the 1(1)k policy that was recently published and reported on by yourselves.

Almost in their entirety those 1(1)ks who were paying less than £10,000 in tax in 2007 were persons who obtained the consent of the Housing Committee in the 1970s or 1980s. In those years, the decision of the Housing Committee to grant consent was based on whether the applicant had sufficient wealth to produce an income which, liable to tax at 20 per cent, would produce an annual tax payment of at least £10,000 in the 1970s and £20,000 in the 1980s.

Contrary to the view still held by some of your correspondents, and implied in the editorial, those granted consent in the 1970s and 1980s did not have an agreement that their tax payments would be limited to £10,000 or £20,000 per annum.

They had to show at the time that they had sufficient wealth to generate the income figure then used to determine whether consent should be granted, but like taxpayers generally, all of the income they have received has been taxed at 20 per cent.

The figures of tax paid in 2007 show that the 30 1(1)ks granted consent in the 1970s still resident in the Island paid an average of £58,000 per individual.

That there should be some 1(1)ks who came to the Island in the 1970s and early 1980s who now have an income of little more than £50,000 per annum should not come as a surprise.

What some might consider more surprising is that those who took up residence in those years and who have now lived in the Island for up to 40 years should still be labelled 1(1)ks and not as individuals with full residential qualifications.

Contrary to what is stated in your editorial, those concerned are not living in the Island on privileged terms and since they came to the Island they have been and remain subject to the same tax obligations on their taxable income as taxpayers generally.

1
Realist

November 2, 2010 at 11:05 pm

A very good letter of explanation, but circumstances have changed dramatically in a very short space of time, due to EU policies, determined to stamp out lower rate tax economies, outside the federalist influenced EU.I can only see disaster looming, with a doomed attempt to increase housing stock in Jersey to defer the pensions defecit.Instead we face an economy with little or nothing to fall back on and yet the disastrous policy of attempting to create wealth and tax revenue by building more and more, profits a few developers in the short term,some of whom pay no tax, but adds, in the longer term, to the whole gambit of added social and infrastructure costs, which can only be met by increases in taxation ad finitum.

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2
Adrian

November 7, 2010 at 12:59 pm

Valid points there Realist. This is going to end in tears in my opinion. As per the EU it is controlling more and more of what Jersey does each year. In the final analysis if Jersey can’t avoid this why not join?

No one has actually asked the valid point of whether jersey could keep some semblence of its finance industry if it were to join. It may be of benefit to join for the vast majority in Jersey, even if it isn’t so for the rich. Is this the real reason why Jersey has wanted to stay outside so as to protect the wealth of a few? I suspect so.

Luxemborg was low tax before entry and has remained so. What’s good for one..

At this rate Jersey will end up down a dead end with no way out if it keeps boxing inself in like this. It is time to think outside the box and finance as this is unsustainable.

Look to history to see what happens when things get over inflated -the South Sea Bubble looked great at the time but we know where that ended. Some made great wealth at the expense of the vast majority who were left broke and destitute.

At least in Europe they give grants to areas suffering financial hardship. No such chance when Jersey deteriorates even further, hence more and more taxes, on fewer and fewer workers, who generate the money for the island as a whole, as well as for the rich who are often their bosses/owners/shareholders.

A fair and balanced society? I don’t think so.

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