Jersey Moves To Maintain Low Tax Shopping

by Robert Lee, Tax-News.com, London

29 June 2010

The States of Jersey has proposed launching an investigation into the pricing of goods sold in the island to ensure that foreign and local sellers do not hike prices in line with other countries, such as the United Kingdom, that have higher prices as a result of taxes not present in Jersey.

The purpose of the proposal is to try to assist Jersey consumers who feel that they are being overcharged by outlets using prices equivalent to those in high tax jurisdictions. The proposal aims to "either lead these individuals or organizations to change their behaviour, or tax these companies’ bottom line, i.e. profits," the document said. The latter was noted as an additional source of revenue for Jersey's coffers. In addition, this tax would offset the cost of such an investigation, quoted in the document as costing taxpayers GBP60m.

The government would achieve this, the document states, "through the Income Tax Law, and in particular those parts of the Law which relate to what are known as the 'Zero-Ten' provisions."

The proposal seeks to ensure that Jersey continues to offer prices consistent with Jersey’s low tax regime.

Jersey levies a Goods and Services Tax, at a rate of just 3%, on a broad range of goods and services, with exemptions on medicine and exports, among other items. The United Kingdom - used in comparison in the proposition - levies significantly higher taxation, with many goods and services currently subject to VAT at 17.5% (rising to 20% next January as a result of June's emergency budget).

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