The 2013 Draft Budget, published today (17 October 2012), proposes a series of measures designed to safeguard revenues and to ensure that Jersey’s tax regime supports economic growth. It maintains a period of consolidation after the major changes introduced in recent years, putting in place the resources to deliver the priorities agreed in the Strategic Plan – jobs, health and housing.
The Minister for Treasury & Resources, Senator Philip Ozouf, said “This budget responds to the uncertain global economic environment. It sets out how we propose to take positive action, including one of the biggest capital spending programmes ever undertaken in Jersey, providing investment in infrastructure, education, housing, health and social services.
“We have made tough decisions in recent years and now our financial position is strong enough to provide significant resources to support the economy and employment in a difficult environment. Now is a time for the stability and certainty that are critical to support economic growth through increased business activity. Jersey’s fiscal position remains strong as a result of the action taken and the Council of Ministers is determined to keep it that way.”
The Assistant Treasury Minister, Deputy Eddie Noel, said “No significant tax raising measures are proposed in this budget, because of the continuing need to support the economy. It focuses on three key themes – safeguarding tax revenues, consolidation and simplification.
“Much has been achieved over the last 12 months. We have modernised tax administration and improved our collection rate. We will continue to take action to ensure we collect the tax that is rightly due.
“Alongside measures to ensure that everyone pays what is due, we are also protecting households on lower incomes by increasing income tax exemption thresholds in line with inflation. This will reduce the number of people subject to income tax.
“We are maintaining relief on stamp duty for first time buyers, which was increased from £400,000 to £450,000 last year. This will encourage first time buyers and provide further stimulus to the housing market.
“And over the term of the MTFP, we are planning to spend £222m on capital projects. This is a budget that invests substantially in the future with measures that support the long-term aims outlined in the MTFP.”
Senator Ozouf added “Following the recent report by the Fiscal Policy Panel, which downgraded the forecast for economic growth in 2012 and 2013, we are considering how the panel’s recommendations might affect the proposals in the MTFP.
“This is a Budget that reflects Jersey’s continued stability during the economic downturn. It also supports the strategic priority of the Council of Ministers, to stimulate the economy and create jobs through investment in infrastructure.”
The draft 2013 Budget is due to be debated by the States on 4 December.
The proposed measures are summarised below:-
There are no significant tax-raising measures proposed in this Budget. Those proposed aim to consolidate and simplify the tax regime in order to tighten compliance on tax collection and reduce avoidance.
• Increase income tax exemptions by 3% in line with inflation
• Retain income tax allowances at their current level
• Introduce targeted anti avoidance to make sure everyone pays the tax that is due
• Remove income tax relief on contributions to life assurance policies for those under ’20-means-20.’
• Introduce minor administrative changes in respect of exemptions for non-residents, benefits-in-kind for directors, the penalty regime for non-resident landlords, the additional persons allowance, the ITIS regime, and private medical insurance paid by employers
Goods and Services Tax
• Amend the ‘bad debt’ relief provisions
• Align the GST treatment on share transfers for domestic property with that for directly owned domestic property
• Increase the duty on alcohol as follows:
• 10% increase on spirits and wines
• 8% on strong beer and cider
• 5% increase of weaker beer and cider (not exceeding 4.9% abv)
• Increase the rate of duty on all tobacco products by 10%
• Increase the rate of duty on all fuels by 3p per litre
• Increase all VED bands by 5%
Stamp Duty and Land Transaction Tax
• Extend the relief for first time buyers to 31 December 2013
• Reintroduce a cap on probate duty
• Introduce Stamp Duty court fees for contested petty debt court hearings (for claims in excess of £3,000)
Capital Programme 2013 – 2015
The report also sets out a detailed schedule of capital projects for 2013, which can be funded from within the spending envelope set out in the Medium Term Financial plan for 2013-2015.