Having just received a rather unwelcome envelope in the post last week, I want to talk this evening about taxation. No one likes paying tax, but the Island obviously needs money to pay for essential public services, and the forecasts have recently indicated that there are shortfalls not anticipated a year ago. Tax is however still an imposition and there is no justification for it unless it meets that requirement of essentiality. Personal income tax should remain at 20%. That is a reasonable rate and is a long standing symbol of our fiscal stability. So far as wealthy immigrants are concerned, I think that they too should pay 20%. Maybe, if there is evidence that none would come to Jersey on that basis, we might have to be pragmatic because, apart from tax, many make important contributions to to the Island’s well-being – but in principle all Jersey residents should be bound by the same rules. Many people are still feeling the pinch of 20 means 20 and the Treasury Minister was correct to put more money in the hands of less well-off taxpayers by reducing the marginal rate.

The taxation of companies is a difficult area. The so called zero ten policy was introduced to ensure that the financial services industry remained in Jersey. It was introduced partly because of international threats but partly because of competition. The Isle of Man reduced their corporate rate of tax to 10% and other countries followed suit. If our tax rate had remained 20%, the banks would have gone. So now they pay 10%.

The zero part of the policy enables overseas investors to deposit money here without paying tax, and that creates profits for banks on which substantial taxes are paid. It is unfair that businesses owned by local individuals pay tax whereas those operated by companies do not. I hope that it might be possible to find s solution to that problem.

GST is an effective and relatable way to raise revenue, but it should not be allowed to rise above 5% for the foreseeable future. That means no complicated exemptions which would only add civil servants in the taxes office and push the rate up to 6 or 7%. Exemptions mainly benefit the better off. GST should be simple broad and low, and protection for the lower paid should come, as now, through the Income Support system.