The Environment, Housing and Infrastructure Scrutiny Panel also has concerns about the effect such a tax would have on property prices and on the availability of land for development, and whether the mechanism for spending the money would be transparent.
The panel, which is chaired by Deputy David Johnson, has published a report summarising its findings following a review of proposals by the Environment Minister to introduce an infrastructure levy. The concerns are contained in its comments on Projet 100, Jersey Infrastructure Levy: Approval in Principle.
The charge would be used to ensure those benefitting from a rise in land value made ‘a small contribution to offset the impact of that development on the Island community’.
Environment Minister Steve Luce wants the current States to agree in principle to the levy, and for the detail to be agreed by the new States in the months or years after the May election.
That, says the panel, is ‘neither appropriate nor helpful’.
It adds: ‘We would argue that it should be the same States Assembly which debates both the in-principle agreement and, if approved, the related draft legislation.’
The Scrutiny panel also raised a number of concerns about the impact of the levy, having heard or received submissions from a number of interested parties, including the Jersey Construction Council and the Jersey Farmers Union.
And they questioned whether the scheme would be viable at all, citing examples in the UK where the levy was not collected because the returns were so small.
To mitigate that risk it recommended that, even if an in-principle decision was made in favour of the levy, the charge would be shelved if it became apparent that it was not viable.
The panel asked for an assurance that: ‘If at any stage and for whatever reason, the formula used in the viability assessment no longer allowed for a minimum of 20% profit margins for developers, the minister would not move forward with the JIL,’
The panel reported that the Construction Council had submitted that a levy would ‘ultimately make property less affordable’.
An expert consultant who reviewed the levy proposals for Environment countered that assertion saying that developers would offer less for the land and that way would be able to maintain profits without property prices rising.
The Construction Council argued, however, that the charge would slow the property sector down and could lead to landowners holding onto land rather than making it available for development.
The Environment Minister’s proposition seeking in-principle approval for the introduction of a new levy is due to be debated by the States on Tuesday 12 December.
