Jersey Mulls Introduction Of Value Added Tax

by Amanda Banks, Tax-News.com, London

23 May 2002

The possibility of the introduction of a 1.5% Value Added Tax in order to alleviate Jersey's current cash crisis was raised at a public meeting held earlier this week, according to a report in the Jersey Evening Post on Tuesday.

The newspaper reports that the meeting - held to discuss future tax structures within the context of a £40 million deficit forecast for the Island by 2004 - was poorly attended, leading Finance and Economics Committee President, Frank Walker to observe that: 'Obviously the numbers attending are disappointing but it is each individual's decision whether or not to come. We can only offer to consult.'

According to the JEP, Senator Walker revealed that even at the relatively low rate of 1.5%, the introduction of VAT could raise an additional £10 million in revenue, which would go some way towards addressing the jurisdiction's budgetary imbalance.

However, the Evening Post reports that, although there was support for the proposal from several of those attending, concerns were expressed that indirect taxes could adversely affect those least able to afford them. There were also fears that although the initial proposed levy is low, once in place the VAT rate could be easily increased.

Local hotelier, Robert Weston reportedly suggested that, if the decision is taken to impose a goods and services tax in Jersey, a system of allowances should be put in place to support the Island's lower income residents.

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