Jersey's 2012 Budget Published

by Phillip Morton, Investors Offshore.com

27 September 2011

Jersey's 2012 Budget, published on September 23, contains numerous tax measures to boost tax revenues and support lower-income workers as part of the government's efforts to tackle the territory's deficit.

Treasury Minister Phillip Ozouf explained that the Budget would help secure the consolidation put in place since the start of the economic crisis and help establish a sustainable future for government finances.

“This budget shows our commitment to the difficult decisions made in last year’s Budget which are now starting to bear fruit. We are on track to meet our savings target, to close the GBP100m (USD155m) deficit and to balance our budget by 2013. We are in a strong position,” he said.

The following measures are proposed to be introduced in the Budget, subject to approval of the States of Jersey:

• Tax exemption thresholds will increase in line with inflation of 4.5% to ensure people on low incomes remain outside the tax net;
• Tax allowances for those within the '20 means 20(%)' personal income tax regime will be maintained;
• Tax relief will be increased for childcare costs for children up to the time they are eligible for States-provided early years' education from GBP6,150 to GBP12,000 per year. This proposal follows a recent report which found the cost of childcare for those under 3 is significantly higher than for older children;
• Restricting income tax relief on pension contributions for those earning more than GBP150,000. This measure is another step towards 20 means 20 for higher earners;
• ISE fees paid by banks to be increased by two thirds from GBP30,000 to GBP50,000 per year to match the GST increase and to meet the commitment given in the 2011 Budget;
• Increases to duty on tobacco (GBP0.35 on a packet of 20 cigarettes) and alcohol by 5% (50p on a bottle of spirits, 6p on a bottle of wine and 1p per pint of beer or cider);
• Fuel duty is to be maintained but Vehicle Emissions Duty rates will be hiked by 5%; and
• A cap of GBP50,000 is to be imposed on tax-free termination payments, thereby reducing the tax-free amount of payments received on termination of employment, affecting primarily high earners.

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