Jersey Deputy Proposes Income Tax Allowance Increase

by Amanda Banks, Tax-News.com, London

10 February 2003

According to a report in the Jersey Evening Post last week, St Helier Deputy, Geoff Southern has called for small income exemption limts and personal income tax allowances to be increased in line with the Retail Price Index for the first time in five years.

The newspaper reported that in a proposition lodged with the States authorities, Deputy Southern asked that the Finance and Economics Committee be permitted to bring forwad legislation increasing the limits in the 2004 budget in line with the September 2003 index.

In order to compensate for the loss of revenue as a result of this, the St Helier Deputy suggested that a 23% rate of income tax should be levied on income over £100,000 for taxpayers whose net income after allowances, exemptions and reliefs exceeds that amount.

The JEP revealed that in a report accompanying his proposals, Deputy Southern observed that the possibility of progressive taxation of those Jersey residents who can afford it has largely been ignored during discussions of how to reduce the jurisdiction's budget deficit, with regressive measures such as import duty increases favoured by lawmakers.

He also revealed that of the £10 million in additional revenue raised by the freezing of income tax exemptions and allowances over the past two years, nearly £8 million was from taxpayers on lower incomes.

'There is no doubt in my mind that much of the resistance among sections of the workforce to settling for pay deals at or around inflation levels in the past year has been driven by a growing awareness that any rise will immediately be clawed back by frozen exemptions and allowances,' he announced, adding that:

'If we try to maintain the freeze for yet another year - making five years in a row - we may well see increased wage demands from an increasingly disillusioned workforce.'

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