States Of Jersey Blocks Duty Increases

by Jason Gorringe, Tax-News.com, London

13 January 2010

The States of Jersey has rejected measures proposed by Treasury Minister, Phillip Ozouf’s, in the budget last month, which would have seen increases in duties on alcohol, tobacco and fuel for 2010.

The proposed increases in Impôts Duty were designed to help narrow the Jersey government's budget deficit and would have raised around GBP4.25m annually.

The increases in duties would have represented a:

• 58 pence increase on a liter of spirits;
• 7 pence increase on a bottle of wine;
• 2 pence increase on a pint of ordinary beer;
• 30 pence increase on a packet of 20 cigarettes; and
• 4 pence on a liter of petrol.

The government has announced that due to the scrapping of the aforementioned measures, the proposed introduction of the Vehicle Emissions Duty in September 2010, which was announced alongside the Impôts Duty increases to fund environmental projects, is to be reviewed.

Despite rejecting the duty increases, the States backed other measures proposed within the draft budget including increases to late filing penalties, and the introduction of the long-awaited Land Transaction Tax, which entered into force on January 1, 2010.

As previously indicated by Ozouf, the Jersey government intends to reduce its budget deficit by cutting back on government spending, not by increasing fees or income taxation. The island’s short-term deficit is to be funded by the government’s two funds, the stabilization fund and the consolidation fund. The government estimates that, as a result of the downturn and the review of the island’s 0/10% corporate tax system, the deficit for the next few fiscal years will amount to around GBP50m.

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