GST: Tax foreign firms, not us!
Tuesday 19th April 2011, 3:00PM BST.
About 30 people attended the meeeting
CAMPAIGNERS last night demanded new measures to tax foreign-owned companies at the first of series of public meetings calling for GST to be scrapped on food and household heating bills.
Although just over 30 people attended the meeting called by Senator Alan Breckon, the message was clear.
One after the other, those speaking from the floor said that the current regime, which meant that the owners of foreign-owned companies trading in the Island did not pay any tax on profits, had to be reformed.
Senator Breckon called the Town Hall meeting to raise support for his proposals to exempt food and domestic energy from the tax – rising from 3% to 5% next month – which will go to the States in just under a month.
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30 people attended! I think most of the population are getting fed up of protest meetings,demonstrations, petitions etc.
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Wow, 30 people.
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On a day when headlines announce a spend of almost 1 billion, energy would be better spent trying to get curbs on spending. We have not been well served by the reforms to the States – paying politicians and the structure of government.
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Lets not be silly here! If it comes to a choice of making low and/or no income families pay more and more for basics such as food, fuel & clothes over what would be a tiny amount for firms that make millions out of being in Jersey, then we know which way it will turn out.
Our politicians care far more about their vested interests than the great unwashed as they see the electorate.
The real tragedy is that without people like Senator Breckon, we would have tragedies on a weekly basis.
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Perhaps someone can explain to me, as I’m very dim, what’s our incentive to allow foreign companies to register here if they don’t give us a share of the profits? Is it something to do with employment?
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30 people attended …. obviously the island feels very strongly.
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the low turn out , means nothing .
many , imho, know that the public are ridden over rough shod.
good luck alan, all eyes on the for and against, when it voting time , well i will be looking.
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WHY WAS IT NOT HELD IN THE ROYAL SQUARE ALAN??????????????
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Delta (no 5) The idea is that they pay fees to Jersey financial services companies, which pay 10% tax on those fees and pay their staff, directors & shareholders (some) of whom pay 20% income tax in Jersey. Whilst GST on food is foolish and wrong, taxing foreign companies too highly (ie above 0% currently) may result in those companies taking their business elsewhere – Guernsey, IOM, Switzerland, Caymans etc.
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Err, didn’t know it was on. Perhaps I am not alone.
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“The idea is that they pay fees to Jersey financial services companies, which pay 10% tax on those fees and pay their staff, directors & shareholders (some) of whom pay 20% income tax in Jersey.”
That is the idea.
However we are in a position now where we are hollowing out our tax system.
The companies are not paying tax and they are saving money by farming out the services they need to cheaper jurisdictions.
The Internet lets you create a company that is registered in Jersey, has London lawyers, Swiss bankers and ships its goods from a warehouse in Hong Kong supplied from a factory in mainland China.
The States do not get it!
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Rockbound,
Those local finacial services companies can move to Switzerland and undercut the locals, as they will pay no tax.
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I am afraid that the rise in GST is a bit of a distraction from the bigger picture, and diverts attention away form teh hidden predator, being 20 means 20.
For manny that have not had pay rises for the past three years, and have during the same time seen their ITIS rate increase from say 13% to 18%, coupled with an increase in essential provisions of food and fuel, they have effectivly seen a pay cut of 25% over the period.
This sort of reduction in disposable income will impact on any growth in teh economy that our elected leaders believe will bring us out of recession !!!!!
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Before we start any kind of further tax reform the States need to pull their finger out and really look closely at the wastage within the departments. And I don’t mean another cut the school milk idea.
There must be scope for serious savings by increasing efficiency within the various departments, cutting out some dead wood and perhaps removing some of the layers of bureaucracy.
Or would we could just raise taxes a little more and allow the wastage to continue…
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When are people going to get that it is our tax regime that attracts wealth to this island. That wealth allows this island to have an infrastructure well beyond its otherwise capability. This may sound heartless but I am merely stating a fact: The poor will always struggle. Jersey provides well for the really needy. If you are just above that threshold then I am sorry but that is your lot. Unless of course you do something about it.
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Oh come on, we’ve had so called progressives in the States for a whole term of office almost and because of their flimsy arguments and lack of understanding they cannot change anything including GST on food.
If people really want change then they have to vote out all these failed career backbenchers and vote in new fresh people who have a better chance of making a change. Obviously from the pathetic turn out of this event, the voting public are sick of them all already.
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Many thanks to both Rockbound and Pip for clearing this up, so as I understand it the benefit is on the tax paid on employee’s wages who might otherwise be unemployed or at least earning as much? And the money gained from GST goes towards subsidising these companies?
As you say though Pip my experience from working in the Corporate division of one of the law firms is that we were acting as little more than a glorified PO Box. We provided incorporation services and even phony “Directors” who could be hired by the other to appear on the board and give the semblance of being local, as well as forwarding on mail.
Also when you look at the companies that are big names registered over here, like a certain major DVD and video game retailer which offers in my opinion long and low paid warehouse shifts on the infamous ‘zero hours’ basis here in Jersey, I fail to see much advantage to islanders. Who would pass up the certainty of income support for a few hours of work here and there at subsistence level wages?
Isn’t it also the case that these same companies are laying people off right left and centre? One of my best friends is doing this ‘Advance to Work’ scheme to help get people into employment and apparently all the big name financial companies don’t want to know. He’s been able to find one month’s unpaid work with a local firm, then two months paid. Forgive me if I don’t break out the party streamers.
I hate to sound selfish but what is in it for Jersey?
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I am still shocked to this day that we can be taxed on things that are necessary to survive….food! Seriously…my god next they will be taxing us on air! (shouldn’t have said that should i…might have given them their next big brain wave!!! )
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when they announced GST they came out in force and Terry sat there calmly saying there have been no protests.
People are just exhausted at protesting here, the states never judge their comments are a possible alternative. So this is why people are not bothering, we have a handful of men and women slowly driving our island into the ground and refusing to look at any option but tax. Oh but nice they get a pay increase which is more tax on the rest
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Whilst this may not seem a big story or even seen to be a failure..I’m wondering if it is not in fact a glaring example of what is wrong in Jersey as for sure the subject bothers Thousands of us..interesting that there are already 15 comments on here yet only 30 people actually went in person….Well, e mailing only takes a mo,is also anonymous..and you don’t have to find anywhere to park..lot’s of people are of course busy keeping their head above water and won’t spare the time,some indifferent…but I’m guessing fear sadly plays a part in these things,there have been many a recrimination performed on those with the temerity to poke their head over the parapet and voice any dissent, there are some very nasty and vindictive people who do not want the public to have an opinion..let alone voice it or influence change…so maybe it is our politicians who need to get with the programme and have online discussions and meetings, Webinars are used all the time,in countries where travel is an issue these are being employed extensively,E-mail voting and opinion polls abound…the lack of physical turn out has been not only relied on by the establishment but also manipulated into saying,”well we had a meeting,and no one came so no one objects or is opposed,,How deluded this makes them ,,I have seen planning meetings that were advertised to the public through the Gazette held mid morning at St.Pauls…who can get to those who work for a living…I have attended meetings at the Town Hall where a handful of stooges have won a vote that affects everyone,and other meetings where just a few retired and eccentrics turned up…we are in 2011..if you want to communicate with us ..get with it…or get the wrong idea….get it…?
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That ony 30 people turned up is hugely significant. This is the latest in a number of protest events that have failed to capture the imagination or the crowds. Breckon looks rather pathetic in the photograph speaking to what looks like a small secret society. Every excuse under the sun will be trotted out for the dreadful turnout, save for the real reason – very few people agree with the organisers.
For the record, the reason why GST across the board is a better option than exempting this, that and the other is that the use of exemptions makes the whole thing complex and opens the doors to lawyers and accountants having a field day. We want simplicity, surely.
On the bigger picture, and picking up on the post above that rightly draws our attention to the impact of 20 means 20, in these tough times, everybody should pay something, through GST if not through direct taxes. And remember, if the price is too high, the product will not be sold and the price will come down.
Simples.
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Alan Breckon is a sincere politician with no hidden agenda, it is a good job he is there.
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Mike if very few people agree with the organisers then there must be a lot of very dim people in Jersey and they deserve what they get.
Mike “if the price is too high, the product will not be sold and the price will come down”
Apply that logic to food and you’d be dead within a few weeks.
The only thing coming down in Jersey is wages, everything else is going up especially taxes and food.
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its about time that we the people of jersey should make a stand and tell our goverment that enough is enough .
all companies , businesses, shops etc should pay 20% tax on profits if they dont like it go elsewhere they are trying to hold us to ransom.
we should do it now and sod the consequences i am sure that we wouldnt be any worse off if they did leave.
i for one would not mind paying 20% of my income if it applied across the board but as it is it is just unfair.
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@24 jessi
“all companies , businesses, shops etc should pay 20% tax on profits if they dont like it go elsewhere they are trying to hold us to ransom.
we should do it now and sod the consequences i am sure that we wouldnt be any worse off if they did leave.”
Are you sure ? And what would you do if entire finance industry (80% of work places?) suddenly moved elsewhere leaving nothing but empty buildings behind ?
Just come up with some sensible plan to keep current employment level in this case – just in case – and I am sure that all of us will vote for uniform 20% tax across the board.
Do not tell us they won’t. Just propose emergency plan in case you could possibly be wrong.
Slawek
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From the comments here it seems that the States are afraid that these companies will pay their trump card and move their business elsewhere, taking all the jobs with them.
In reality I don’t think it would be as simple as that but it seems that employees are in a position where they are paying for the privilege of coming to work.
It also seems to me that since the GST is a flat rate of 5% it is going to hit poorer people hardest. If we must raise taxes to accommodate the finance sector, why not raise the threshold of income tax so that all the senior managers and directors of finance companies will have to pay more towards the general coffers?
If we raised the bar to say 30%, those earning six figure salaries could at the very least finance a state subsidy on no GST on basic food stuffs and electricity?
Is this overly simplistic or could this be done?
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Hi Delta,
I think I understand it slightly differently (rightly or wrongly). I understood the States had to introduce, legally, a system whereby the company is taxed in the country of origin. This is to ensure the company pays taxes in its own country and not a lower level of tax in a country such as Jersey. This should have pleased people like Adrian who often comments that Jersey is a leach on society
Basically, if Sainsbury set up in Jersey they can’t funnel all their profits through here and have to pay tax in the UK.
I understood this was an EU directive and not one we had much choice in if we wanted to continue to have our unique banking system. So for every pound we lose to the UK taxes we make £10 from our banking system – simplified but it helps me understand it too
Jersey, Guernsey and the Isle of Man have gone down different paths to achieve this and it may need tweeking but that is why we do it.
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Slawek finance always whinges about taxes, threatening to relocate. If it is that flighty it would be better to diversify and let it go elsewhere. Being held over a barrel, as I see it, is not the way to run an economy. Having allowed this state of affairs to arise by not diversifying years ago is beyond stupidity, as far as I am concerned. I even warned about this likely outcome many years ago. However people then said there was nothing to worry about. Ha! Ha! Ha! Just as they did about the demographic time bomb!
Cathy why come to Jersey? Companies generally relocate for tax reasons and/or cheaper labour. I believe you will find many UK companies using tax vehicles in the Channel Islands and the Cayman Islands to cut their tax bill due in the UK.
I wouldn’t call Jersey’s banking system unique, I am led to believe it works along the lines of tax efficiency (avoidance), like the other tax havens/low tax areas do. I believe this is its reason d’etre.
I would recommend you listen to the likes of Radio 4 who often do pieces on these issues. Maybe this station might be too radical for you though.
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Adrian,
What would Jersey diversify into? I’ve asked you dozens of times and you have no answer. Small island economies are generally very poor because the costs of transport prices them out of most markets. The only exceptions are those with natural resources or an intellectual property/non-physical based economy. Like the finance industry, or internet gambling, or shipping registers.
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28. Adrian.
Once again you rattle on about diversifying out of the finance industry, but once again you offer no other option as to where we can diversify too!!
Please come up with a valid alternative then perhaps we might actually start listening to you. Oh, and the usual tourism and agriculture ideas are long dead and buried, so I await your input.
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Cathy,
Thank you for your comments. Perhaps I am still being a little slow but if said companies must register here and pay tax in their own country, I wonder what then is the advantage of having a presence in the Channel Islands?
As you say the benefits to us seem obvious on the face of it – increased employment and they bank their profits locally.
If you’re right then as far as I can see the worst has already happened and an additional 5% on these foreign firms would have minimal repercussions. If in any case, we need to rely on the offshore banks and personal income tax to shore up our finances, shouldn’t we increase these before a blanket tax on the essentials of life?
I realise 5% isn’t very much but even though I have an office job, like many islanders no doubt I pay such extortionate prices on food and rent already I have literally been down to the last pound and even a few pence to buy a loaf of bread has made all the difference.
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John Rambo,30, Adrian is quite right, Jersey does need to diversify.
His hobby horse is justified. The fact that he doesn’t know the answers does not make his comments less valid. At least he realises the importance of the problem.
If he did know the answers he could become rich.
Most of Jersey’s population are desperate to become rich, so get those thinking caps on and roll out some diversity.
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