Jersey Businesses Warn Against 'Perks Tax'

by Amanda Banks, Tax-News.com, London

25 March 2002

The Jersey business community has warned that proposals to introduce a tax on benefits in kind granted to employees, such as company cars, free accommodation, and free parking, could have a devastating effect on the jurisdiction's international competitiveness.

According to a report in the Jersey Evening Post last week, small business groups have warned that the new measures - which were agreed in principle by the Finance and Economics Committee, and are now under public consultation - could lead to the collapse of numerous SMEs on the Island, and will make it a more expensive place to do business.

Speaking to the Jersey newspaper, Chief Executive of Jersey Finance Ltd, Phil Austin, warned that the measures, which would bring in around £2 million in additional revenue if passed, would affect businesses across the board, and not just the finance industry:

'I do not have a problem in principal with taxing benefits in kind,' he explained, 'but I am concerned that it will increase the cost to employers in the Island, which is not welcome at a time when Jersey costs to businesses are already out of line with those in other jurisdictions.'

However, the proposals have been welcomed by the Jersey Taxpayers Association, which has announced that by removing the provision which allows employers deductions from their trading profits on benefits in kind, the first step towards attaining a balance between the proportion of the tax burden shouldered by wage earners and by big businesses has been achieved.

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