It emerged during questions in the States today that Members can legitimately ‘rearrange’ their finances by a number of methods that will allow them not to face an assessment of income while being able to claim income supplement.In response to a question raised by Senator Stuart Syvret, Privileges and Procedures president Senator Christopher Lakeman revealed that calculations for income support for each Member are based on the statement of income provided by the Comptroller of Income Tax.He said that discussions with the Comptroller confirmed that, as the means test for determining income support is based on income received in the Member’s own name, the amount can be legitimately reduced by a number of methods.’A Member can transfer a bank account, dividends or profits which yield income from their own name into their spouse’s name.
In these cases, the income is still properly declared to the Comptroller and taxed but it does not form part of the Member’s own income for means-test purposes as the present scheme specifically excludes the income of a spouse,’ said Senator Lakeman.He said that States Members with companies can pay themselves modest director fees rather than paying all corporate profits to themselves.
‘While all corporate profits will be taxed, only the director fees received will be included as income for means-test purposes,’ said the Senator.He also said that it was possible for a politician to receive income which was neither taxed nor taken as part of the Members’ income for means-test purposes due to a States decision made in July 1998.’This would relate to items such as maintenance payments and benefits such as family allowance, sickness, maternity grant, rent rebates etc.
Therefore, if the income is not taxed because it is exempt, it does not form part of the return to the Treasury on which calculations are based for income support,’ said the Senator.However, it also emerged that these loopholes may become almost immediately obsolete if the States approve a proposal due to be debated later in the sitting.
‘That will end means-testing for Members’ remuneration and if accepted, these issues will not arise in future,’ said the Senator.Senator Syvret asked if some Members had been acting ‘outside the spirit of arrangements’ and contended that the existing rules allowed declarations that are ‘little more than a charade’.Senator Lakeman responded that it was somewhat vexing for him that people are able to take positive steps to rearrange their affairs when he as a partner in a firm is unable to take similar steps.However, Deputy Terry Le Main wanted to know what evidence Senator Lakeman had that some Members were avoiding full income declaration.
‘This casts a slur on this Assembly,’ said the Deputy.Senator Lakeman said that the examples given were both factual and accurate.
However, he said that the details of Members’ individual declarations were confidential.
