A letter was sent to all States Members this week from the Jersey Chamber of Commerce, Jersey Retail Association and the Jersey Consumer Council ahead of the Retail Tax rescindment debate in the States Assembly.
This came ahead of yesterday’s Rescindment debate.
The letter said:
RETAIL TAX RESCINDMENT DEBATE.
Dear States Member,
We jointly write to you today, as a collective group of business representative organisations, all sharing one common theme. Our very grave concerns regarding the budget decision to introduce a new Retail Tax at a rate of 20%.
From our subsequent research and Freedom of Information request shared with you via email on 16th January 2018, we have proved without a doubt that there was no consultation a.) over a twelve-month period, or b.) at all. However, each of you were explicitly informed this vital work of consulting commerce had taken place. Therefore, your decision to vote in favour of the tax may have been based on an assumption that retailers had plenty of notice, discussion and time to plan. They had not.
You will be aware of the empty retail outlets in and around the island, especially in St Helier, which are currently at a vacancy rate of 2.2%, the highest for ten years. That represents approximately £1million of available rental space in St Helier alone and while footfall figures for February were up 7.3%, these customers are not translating into sales.
A vibrant and diverse retail offering is equally as important for islanders as it is for visiting tourists. The negative impact of large empty shops on the high street cannot be underestimated and first impressions can only be formed once.
Jersey’s retail sector is dependent upon new entrants into the island, replacing those that leave either because their local store has not been a success, or Head Office make a strategic decision to exit the market. It is, therefore, vitally important new retailers are encouraged to establish a presence in Jersey. However, most new entrants are UK retailers, where corporation tax is 19% and set to reduce to 17% by 2020, leaving Jersey uncompetitive.
On-island retailers are already operating at an unfair advantage to off-island retailers, who can deliver their goods to Jersey (up to the value of £240) and not charge tax. Whereas on-island retailers must charge and collect the Goods and Services Tax (GST) on all items. It must be noted that a continued erosion of the retail sector and empty units, will result in reduced GST receipts for the States.
The Jersey Chamber of Commerce, Jersey Retail Association and Consumer Council have agreed that a rate of 10%, akin to that of the Finance sector, would be fair. There can be no doubt, the 20% rate will be and is already being harmful to the sector and local economy, as:
- Costs will be passed onto the consumer
- Investment in premises, services and training will be abandoned or scaled back
- Non-Jersey retailers will think twice about entering the market when a cheaper rate of corporation tax is available in the UK and where there is far greater access to staff
- Shops will remain empty and visually blight the high street and other retail outlets around the island
- Fewer jobs will be available and unemployment will rise
- Tax revenue from ITIS and Social Security will be reduced and income support payments will likely increase
As has been previously stated, the introduction of this tax is likely to result in increased food prices and will affect the least well-off islanders the most. For an eight week period, leading up to mid-March, the Jersey Consumer Council have collected and monitored food prices on ingredients for four basic recipes (chicken pie, cottage pie, fruit crumble and flapjacks). Since mid-January, shortly after the retail tax was introduced, the prices of these foods across five supermarkets in Jersey have risen by 1.28%.
There can be no doubt, the 20% retail tax is a barrier to entry. There are also no assurances from the States that the current threshold of £500,000 will not be reduced in the future, in order to capture more retailers and further boost States revenue. Nor are their reassurances that this new tax at a rate of 20% will not be introduced across more sectors of commerce, with large liquor vendors currently being considered by the Treasury for a tax rate of 20%.
Commerce accepts it must pay its way in Jersey, however, it must be done in a way that does not threaten future prosperity, jobs or the island’s economy.
We would strongly urge you to vote in favour of the rescindment motion to introduce a fair rate of 10%.
Jersey Chamber of Commerce
Jersey Retail Association
Jersey Consumer Council
At the time of publishing, the debate has not yet finished.