In an amendment to the Budget, Deputy Sam Mézec said that his plans would leave 90 per cent of Islanders either better off or see no change to their taxes and that by charging higher earners more, States coffers could be boosted by £6 million.
Under the current system, Islanders pay the lower of the ‘marginal’ 26 per cent rate, which has a generous exemption threshold and numerous allowances, or the 20 per cent ‘personal’ rate, under which there is no threshold and far fewer allowances.
Effectively, the system means that lower earners pay the marginal rate and higher earners the personal rate. High-value residents are wealthy immigrants who relocate to Jersey and are offered a special tax deal.
Under Deputy Mézec’s proposals, he said that a single person earning less than £72,000 per year would see a tax cut while those earning £90,000 would see a one per cent rise. He then said that this would not be ‘unreasonable’.
Deputy Geoff Southern, a Reform Jersey colleague of Deputy Mézec, said: ‘How many of you would be voting against the Treasury Minister if he brought this proposition.
‘When we were told [by Treasury officials] that this would raise revenue we said “you’re kidding”.’
He added that the proposals would benefit middle earners and should be seen as a ‘no brainer’.
However, Treasury Minister Alan Maclean argued that such ‘fundamental changes’ to the tax system should not be done without proper consultation and review. He added that a review of the tax system was currently under way and due to be completed in 2020.
Senator Ozouf added that asking higher earners to pay more would likely lead to them leaving Jersey.
Chief Minister Ian Gorst said that while that was a possibility, the ‘truth is that Members don’t know’ what the response to the proposals would be.
He said: ‘That is not the way to deliver tax policy or such fundamental change.’
Deputy Mézec rejected the suggestion that a review was required and accused the Council of Ministers of attempting to do nothing.
He said: ‘The argument he made is that we can’t have changes without review. I am sorry but that is a reason for not doing anything.
‘If we are having a review isn’t that an admission that there is something wrong with the system?’
The proposals were ultimately rejected by 34 votes to ten.
