Senator Lyndon Farnham, who earlier this year announced that he intended to stand for Chief Minister if he is re-elected in May, said that setting taxes too high can actually result in less revenue being raised for the States.
‘I tend to think that we have lost opportunities to raise revenue from the business sector by asking for too much,’ he said.
‘I think it is reasonable to ask business and commerce to contribute a bit more and they do want to help but I think we do need to work with them more.’
Last week retailer Gerald Voisin, who owns Voisin’s department store, claimed that firms are losing confidence in the government following the introduction of the new retail tax and the increase in Vehicle Emissions Duty.
He claimed that both were approved in last November’s budget for 2018 with little consultation.
The retail tax introduced a new levy of up to 20 per cent on profits of more than £500,000 made by retailers. At the same time, VED band thresholds were lowered, which in some cases meant that charges on new vehicles being imported to the Island rose by 177 per cent.
Critics, including Mr Voisin, have claimed that the retail tax was set too high and should have been applied at ten per cent, while the VED uplift was attacked because it was approved by the States just two weeks after being lodged.
Senator Farnham commented: ‘I have always said that we could have introduced the waste charge [on businesses] at a lower rate, and the retail tax as well, and they would have been more acceptable.
‘But the waste charge has been delayed and kicked into the long grass now because we were too greedy and the treasury is now losing out because of that.’
He added that he thought the retail tax was announced in reasonable time, but agreed that a ten per cent rate would have been fairer. ‘I do agree with the retail tax but I think rather than at 20 per cent it should have been introduced at ten per cent,’ he said.
‘I don’t think it was introduced too quickly because it was approved in principle in the 2016 budget – but I do think it was too high.’
He added: ‘I think the new government coming into the States Assembly [after May’s general election] needs to work more closely with businesses and make sure that we don’t introduce taxes that are considered to be too high.’
