Medium Term Plan: No Hard Facts on Stealth Taxes

Philip Ozouf recently said: “Finance sectors results exceed all expectations”, and Geoff Cook of Jersey Finance tweeted “Jersey's Finance Industry Records Stellar Performance in 2014”

Meanwhile we read on the news:

“The deficit in public finances has grown to £145 million and ministers are now planning even bigger cuts in the States’ wage bill and a freeze on benefit spending to fill the gap.”

Something is clearly wrong with the economy if the finance sector is doing really well – but that is not translating into increased revenue for the States.

We all know what the elephant in the room is, of course. It is Zero / Ten. Ever since the “deemed dividend” was ruled inadmissible by the EU, and removed, no trading company has paid any tax in Jersey. There is no capital gains tax, so if a business is sold, including cash in the bank, the seller gets the money as one off sale, not as income to be taxed.

And I certainly remember Philip Ozouf on numerous occasions when he was Treasury Minister, saying that the Treasury would be working on a solution. This one plays on and on, rather like Waiting for Godot.

The draft Medium Term Financial Plan outlines government’s income and spending proposals for 2016-2019, although it is moot whether outline or hastily sketched cartoon would be the better description. What, for instance are we to make of this, as summarised by Bailiwick Express (and also in the JEP):

“£45 million will be raised in ‘charges’ (which appears to be the new word for ‘taxes’) – although we don’t know how the health and waste taxes will work, if its spread evenly across the Island that works out at £1,000 per household, per year.”

This is supposedly some kind of business plan, which aims to get a principle for raising stealth taxes on health and on waste without specifying how these will be collected and on what basis they should be charged.

It seems sneaky to try to get approval for extra taxes in the Medium Term Plan without having to specify what they are or how they will be levied, just that they will be! How can anyone vote to approve anything on that basis? It’s not a business plan so much as a proposal for a smash and grab raid on Middle Jersey, and probably those on less incomes as well.

And the spirit of Scrooge is alive and well! Scrooge would be overjoyed to hear that £1.8 million – which in States budgets is a relatively small amount – will be found by by cutting the Christmas bonus for pensioners and phasing out the free TV licences for the over 75’s.

And you can bet your bottom dollar that if before the next election, the States Remuneration body says they can have a pay rise, they will say how sorry they are but this is independent - and take it, or say they are giving it to charity - but it will go up regardless!

It’s about time States Remuneration was linked to Public Sector pay awards, then they might appreciate how much they can do as their own contribution to cutting expenses.

The States website says: “This is the first part of the MTFP. The second part, the 'MTFP Addition', will contain detailed departmental spending for 2017 to 2019, and will be published by the end of June 2016.”

Will that contain the fine print detailing how the new taxes are to be levied and on what basis? I somehow doubt it. Where is the detail on expects from a business plan?

“Medium” Term Plan is probably the best name for the plan, as to know what the Council of Ministers really intend on taxes (or “charges”) on waste and health requires the talents of a clairvoyant.