JFIA Takes 'Measured' Approach To PAYE Proposals

by Jason Gorringe, Tax-News.com, London

14 January 2003

Members of the Jersey Finance Industry Association are reported to be taking a 'measured and balanced view' of proposals to create a pay-as-you-earn (PAYE) regime for the Island.

The Jersey Evening Post quoted JFIA spokesman, Bob Henkhuzens as announcing that although the association is in favour of the plan inasmuch as it would create a more efficient tax collection mechanism, and would help crack down on tax evasion, there are likely to be additional costs, both for the States and for employers on the Island, and these need to be considered before a decision is made.

'The JFIA's focus was, and remains, on the additional tax that could be collected from those employees who have been dodging the system, and/or those working here temporarily and not paying tax and therefore enjoying the Island's public services but not contributing to the costs,' he observed.

However, according to the JEP, the cost to the Income Tax Department of such a move has been estimated at around £1.25 million, and many Jersey businesses would also need to install new IT systems and employ new staff in order to cope with the new regime.

Speaking to the Jersey Evening Post, PricewaterhouseCoopers senior tax partner, Jane Stubbs questioned the likely effectiveness of a PAYE scheme in tackling tax evasion:

'The temporary workers who are traditionally blamed would fall below tax exemptions anyway, so they would either have to be exempted from the system, or tax deducted and paid back later,' she reasoned, continuing: 'Other workers, including those in the construction industry, would claim to be self-employed and so be outside PAYE altogether. So it may not be the answer to evasion.'

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