A controversial tax on Jersey’s largest retailers has been approved as part of the 2018 budget, sparking fury.
Politicians voted by 26 to 14 to introduce the new 20% tax on profits, which would be payable by those with a turnover of £2million or more. The rate would be payable on profits exceeding £750,000 and tapered on profits between £500,000 and that amount to avoid a cliff edge.
An attempt by Senator Philip Ozouf to introduce the new tax at a 10% rate was rejected.
In a statement, the Chamber of Commerce said: “The decision made by States members to introduce this new 20% retail targeted tax is extremely damaging for all sectors of commerce. Despite severe warnings from both the Jersey Chamber of Commerce and Jersey Retail Association, that such a tax would negatively impact future investment in training, premises, products and services, the States have chosen to ignore sector-wide warnings and push ahead with the tax as part of the 2018 Jersey Budget.”
But defending the new tax, Treasury Minister Senator Alan Maclean said: “Proposing a positive tax rate for the retail sector also brings us into line with Guernsey and the Isle of Man, who have already introduced a retail tax. A retail tax applied only to the largest retailers also addresses previous concerns about non-locally owned businesses were not paying tax in Jersey, because of the twenty or so business captured by the retail tax, 75% are not locally owned. It is estimated that this measure will raise £5.8 million a year.”
Chamber says retailers weren’t properly consulted beforehand and that large retailers will now either shelve plans for development or substantially reduce them. It also warns employment opportunities may stagnate, as will investment in training.
It said: “The ultimate loser will be the Jersey consumer, who may have to pay higher prices, especially in food retail. Consumers who, as a direct result of the existing unfair GST de Minimis level, are already encouraged to shop off-island, and who will now be driven to look and shop elsewhere. Ultimately this tax could threaten the future viability of retail businesses, jobs and potentially see a reduction in the ITIS, Social Security and GST take for the States. All of which clearly erodes the £5.5million that the Treasury Minister has earmarked to raise by this tax.”
