Fulfilment decision ‘will net UK half a billion pounds’
Wednesday 30th November 2011, 2:59PM GMT.
UK Chancellor George Osborne making his speech yesterday
THE UK government is predicting that it will rake in almost half a billion pounds over the next five years following the closure of the Channel Islands’ fulfilment industry.
In a politically charged speech to Parliament yesterday, UK Chancellor George Osborne reconfirmed plans to shut down the industry that currently employs around 1,000 people in Jersey alone.
He accused it of undercutting the struggling British high street and in a document accompanying the statement estimated that its closure would bring in for the UK a total of £490 million in extra tax receipts by 2017.
Yesterday the JEP reported how that money – £90 million in the first year rising to £110 million a year by 2017 – had already been earmarked to fund a new infrastructure project aimed at boosting the UK economy and creating jobs there.
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So, that is how much stopping it is worth to them. Having it must be worth a lot less than that to us, or else there would have been no point. It is very hard to think what those who wanted to get tough with the UK about it could have said, that would have spoken louder than those figures.
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Savings to the UK………..but what will it cost Jersey ?
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It is very hard to say what will happen to the fulfilment industry.
Some bits will remain in Jersey and continue trading as they are Jersey businesses with a fulfilment arm, it was nice to have and they will keep some of it but it is not their core business, or the tax advantage was not that important and they can trade profitably without it.
Others may go back to the UK. They will lose the tax advantage but trading from a cheap out of town warehouse and cheaper distribution may make up for this.
Others may decide that they really need the tax adavantage and seek pastures new.
Until businesses start making announcements you cannot say what will happen.
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Osborne’s either a liar or a numpty if he thinks the fulfilment industry is in any way to blame for the UK’s high street woes.
Firstly, his statement suggests that the UK high street only sells low value items such as CD’s and DVD’s and other bits of junk under £20 because that is the only area that the fulfilment has advantage of over high street.
Secondly, he’s failed to realise the main reason high street retailers like HMV and Blockbuster, who are in competition with fulfilment, are going the way of the Dodo is because of the fact that the future of media access is over the internet and not through purchase of hard copies from retailers on the high street. I find the Chancellor’s lack of appreciation for this fast growing area of e-commerce alarming but not surprising.
Thirdly, the main reason why the UK high street is suffering is because his government, and governments before, have been in cahoots with the big corporate supermarket chains allowing them to UNDERCUT high street retailers who sell goods and services from nuts and bolts to household insurance cover. Meanwhile his government adds insult to injury by letting the same supermarkets’ fulfilment operations to continue to operate out of Switzerland.
So the grounds for ditching fulfilment won’t provide any needed relief to the UK’s high street because those that are affected by fulfilment have business models already doomed to fail. I’d also challenge his figures on the additional tax he expects to net. I’m sure the £100m pa are gross and do not take account for all the additional administration that will be needed to ensure all goods under £17 have the VAT paid by the recipient. Although it will create lots of UK jobs!
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Oh dear, the UK government have their own Big O in the Treasury. Rising to £110 a year by 2017? I think not.
By 2017 technology will have moved on and will be downloading most of our films and music. The CD and DVD will be as dead as VHS tapes.
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Agree, they already stopped making CD drives on some laptops…
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half a billion over five years , not much is it.
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Never made us that much money…
Sorry forgot about Zero Ten.. They never paid tax here.. silly me.
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The man is talking rubbish its about time Jersey went alone and let Blighty mind there own business then they cannot interfere with us
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Russ, Mind their own business? Is that why our Treasury Minister Philip Ozouf went to the Liberal Democrat Party conference, to mind his own business?
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Ozouf merely went to have a look; attending a conference of one of the parties is a separate issue from that of whether the UK government should mind its own business. Clearly, it should mind its own business.
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Lets face it the so called fat cats from this industry became greedier and greedier nothing that I know of was ever put back into the Jersey community and whilst much of the community struggle find a home or can afford a home a symbol of that greed stands empty overlooking one the most beautiful and privileged outlooks the island has to offer and stands empty and un-finished for how long…..It is sad that some of the community will have to loose their jobs some will filter back into work some may have to leave the island some who knew this would one day come to an end will have a plan B. I would like to think this would serve as a lesson but I doubt it, but remember they said the Roman empire would never crumble.
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Fair enough, plus it’s not like they don’t need the money!
While I sympathise wholeheartedly with those who will be losing their jobs, I can’t help but feel irritated by those who are jumping up and down saying how unfair this is.
Seriously, if you build a business on a loophole, especially if that loophole is losing someone a lot of money in a financial climate such as this, you have no right to complain when they close said loophole!
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UK to rake in half a billion pounds following closure of Channel Islands fulfillment industry.No way, but it’s another step from the UK to marginalize Jersey unfairly.We need adequate politicians to represent what we are, transparent and able to support a low tax regime, without censure from the UK, dictated to by their EU masters.
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If you want to be taken seriously then don’t exploit a tax loophole?! If your going to exploit the UK then no, you will not be treated fairly!
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Well bully for the UK Goverment. And we in Jersey,s Goverment try to appease the UK in any way we can as usuall to keep favour.
Did our boys not see it coming ???? useless.
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Appease? How so? What foot, pray tell, does the States government have to stand on when an industry on the island is exploiting a loophole in a UK law?
And boys not seeing this coming? What you mean is that they hoped the UK government would not do what they are perfectly entitled to do and close the hole?!
Quite rightly the UK goverment has told an island leaching off it, to go and do one.
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“exploiting a loophole in a UK law?” Sorry? What loophole? The Law you mentioned is a law that states VAT is not collected on items of a low value (about twenty quid). What loophole is being exploited, or do you mean to say “Following exactly what the UK law states”?
What the UK Government think they are doing is saving the high street media outlets from dying out.
What they have actually done is ignored the reason for the problems with the high street outlets (the current recession, changes in consumers purchasing options, changes in available media from hardcopies to online access, supermarkets selling said media, etc.) and tried to blame the Channel Islands for it. They have done this by making up random numbers to impress the ill informed voters who may not have realised that this is a tax on choice to purchase cheaper products from elsewhere.
The incorrect use of the word “Loophole” simply shows a lack of understanding.
Likewise any comment on the loss of “Tax” to the UK or what monies the UK are “Entitled” to simply ignores that people want to purchase something cheaper if they have the option.
If you believe what you posted, then you morally have to shop around, and you have to buy the most expensive things you can, ignoring the same products cheaper elsewhere. Otherwise you are ripping off the government from the VAT or GST they are entitled to.
Do you consider that not doing this is Tax Fraud? If it isn’t, then there is nothing wrong with the fulfilment industries methods, If it is, then you must be a very wealthy person….
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Getting out of Afghanistan would save more than just the money to restart the UK economy. Go on George, tell the guy laughing behind you to give that a go. The internet shopping experience is what’s killed the high street in the UK, not the fulfilment industry. What are you going to do about that? Shut it down as well? Working people these days like a bargain, if you can shop on the net and save a bucket load of cash then why wouldn’t you? Don’t forget that your salary is probably a good bit above most peoples income these days, or have you not taken that into account? I think your estimations are incorrect, as the fulfilment industry will just go somewhere away from your reach. Good luck collecting all that extra money, it’ll probably cost more in administration than it’s worth, but when did that ever stop a government department. And whilst I’m having a rant, what do you suggest the 1,000 or so people soon to be made redundant thanks to you do in the future? Hang on, you don’t know any of them do you. Thanks and Happy Christmas. You really couldn’t make it up.
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The whole concept underpinning the so called ‘fulfilment industry’ is rotten to the core.
The directors of these companies should be held to account for the financial, social and reputational damage they have caused.
Creaming off tax revenues from other jurisdictions is a very sick foundation on which to base a business … let alone a whole economy.
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Obviously the UK government have been on the happy pills! or someone has overestimated the effects of such decisions.
maybe they should actually wait to see what the fulfillment industry chooses to do before celebrating this win of theres….. not to mention they created low value goods relief because it was so costly to collect the few pennies of tax on these low value items.
Are you really telling me that internet orders under £15 originating from the Channel Islands really amount to £450million a year?
I’d be amazed if it netted any real increase of tax revenues once the costs of collecting the tax are taken into account… maybe he just wants to create a few more jobs in HMRC?
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Nice one George my son!!
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They look mightily pleased with themselves …….and so they should!!!
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£490 million in extra tax receipts by 2017?
They might want to get their own house in order, what about the £6 billion unpaid tax bill by Vodafone in 2010!
I see no one is held to account on that one!
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I’m as digusted as anyone over the way that Vodaphone gets away with this arrangement.
However, if they had to pay more tax, do you think that their fat cats would take a drop in their standard of living? No, they will pass the cost on to the customers.
Is it fairer for all taxpayers to support Vodaphone’s fat cats or should it just be those who need their product?
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I can’t see why so many people are getting upset by this. Surely a loophole by it’s very nature will get closed at some point so to expect a long term future for it is just silly.
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The reason why fullfilment is being stopped by the UK is due vigorous campaigning by UK based businesses who have been put at a 20% disadavantage by Jersey based companies exploiting this loophole. Some have gone to the wall during this time. They have been kicking up merry hell ever since this started. Looks like their government have finally listened to them.
Jersey will be left to pick up the pieces from a business model which was never going to last. Nice one states of Jersey.
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There is nothing stopping Jersey companies trading… Everything is already in place.
May be smaller profits but still worth trading …
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The VAT loophole made the fulfillment industry viable in Jersey. without the VAT loohole what is the point of incurring the cost of shipping goods to Jersey, repackaging them and sending them to the UK?
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