Jersey Taxation Society Suggests PAYE Introduction

by Jason Gorringe, Tax-News.com, London

06 September 2002

Speaking following the Finance and Economics Committee's decision to hang fire on any major business tax changes until next year, spokesman for the Jersey Taxation Society, John Riva welcomed the news, and suggested that the introduction of a Pay As You Earn system may be more effective than a sales tax in broadening the jurisdiction's tax base.

Warning against increasing the tax burden on Jersey's corporate residents, Mr Riva told the Jersey Evening Post that: 'Companies are the wealth generators of our society and any reduction in corporate taxation will undoubtedly increase the Island's international competitiveness. This (decision) ought to provide the right climate for Jersey companies to flourish and prosper, with obvious economic benefits to Jersey.'

With regard to widening the Island's tax base by introducing VAT - a proposal recently put forward by the Jersey Finance Industry Association, but vehemently opposed by the jurisdiction's business community - Mr Riva observed that:

'Some form of consumption tax would achieve this, but implementation is expensive and consumption tax is generally indiscriminate in whom it affects, as it taxes the poor as well as the wealthy, and residents as well as tourists.'

'An alternative way of increasing the taxpayers base (but not the tax base) is through the direct tax system,' he explained to the JEP. 'This can be achieved by rationalising our tax allowance system, which would also provide the right environment for the introduction of PAYE.'

Although, according to the local newspaper, the Finance and Economics Committee's consultation paper does not specifically discuss the possibility of introducing a PAYE system, many of the 300 plus responses to the second discussion document were in favour of this option.

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