GST changes to lure super yachts » Business » This Is Jersey.
Jersey is going bust.
Tax on ordinary people has to rise.
It's corporate tax laws do not comply with international standards
But don't fear! The latest news is:
CHANGES have been made to GST (VAT to the rest of the world - ed) rules to encourage more super yachts to berth in the Island.
It has been agreed that yachts owned by non-residents should be allowed to stay in the Island for an extra six months without incurring the three per cent tax.
Until now, yachts owned by non-residents could stay in Jersey ports for up to a year without GST being charged. That time has been extended to 18 months. The new rules also allow the 18-month time period to restart if the yacht leaves Jersey waters for a period of longer than 14 days before returning.
The rule change, which takes immediate effect, should make it easier to attract more super-yachts such as the giant £11 million Tickled Pink.
Tax expert John Shenton said that it was estimated that about ten per cent of the value of a yacht was spent each year in keeping it in a port, so a £10 million yacht would attract spending of about £1 million annually.
So there we have it: pure regulatory abuse to suit the needs of the rich.
And Jersey denies it has been captured for abuse as a tax haven.
That is exactly what it is.
And they're Tickled Pink about it.
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Richard,
Perhaps the three percent tax brought in approximately zero in revenue, or even a negative when all governmental costs were included. It would make better economic sense to keep the ships in port and have them spend their funds in ways which actually benefit the economy in a positive manner (eg. not taxation)
Georges
Richard
Now let’s think about this carefully
I’m going to spend £10 million on a yacht
And I’m going to spend a million a year running it
And you seriously think that having committed that much to seriously misguided hedonistic activity (by almost universal consent the best two days of owning a yacht are those when it is purchased and eventually sold) a 3% tax on some of the cost of mooring it will really seriously alter the decision as to where that mooring might be?
The tax might be £30,000 – and is already completely avoided by taking the thing to sea for 14 days.
You honestly think if you can throw a million year at running a yacht plus £5000,000 opportunity cost in finance of owning it plus a year and depreciation of at least the same – total at least £2 million – that what will by then be less than 1.5% of running cost really alters the decision of where to moor it?
Get real. Of course it doesn’t. Not one iota. But what it does say is that Jersey wishes to be seen as a place that does not tax the rich and is indifferent to taxing its own population. That is very different.
My analysis stacks – yours does not – does it? Because in economic terms yours makes no sense at all. Other issues, such as facilities, access, climate, availability of crew, and much more will count. 3% GST is irrelevant, and you know it. But it certainly wounds local sentiment and fuels local feeling that ordinary people are being abused o support the rich.
Richard
Richard,
The tax might be £30,000 – and is already completely avoided by taking the thing to sea for 14 days.
Precisely, so why have the law on the book in the first place? This would go to the “brought in approximately zero in revenue” issue.
Thanks for making my point.
Now that we know the tax probably does not bring in any revenue (at the least), wouldn’t it make better economic sense to keep the ships in port and have them spend their funds in ways which actually benefit the economy in a positive manner (eg. not taxation)?
Georges
Richard,
p.s. three percent of ten million = 300,000 (which even further makes my point, a tip of the chapeau again. the threat of onerous taxation does make individuals behave differently)
fyi
Georges
You are missing the real benefit of this change which is avoiding the 3% tax on the purchase amount of the vessel.
Surely they should be charging a significant mooring fee, not an arbitary GST. Easy to collect, difficult to avoid – in fact a form of land value taxation!
No we are not Tickled Pink to hear that the Jersey government is making concessions to the rich. Shenton has a cheek and the BBC Radio Jersey interview showed a deriliction of its duty in not being even a little critical.
Unemployment is at a high in the island at 1000 officially and much higher given there is no incentive to sign on, there being no unemployment benefit. Those with five years residence can claim Income Support, whilst those with less can go back home or starve. That is the logic of Jersey’s government or should we be more precise the government of the Rich that is the government of Jersey.
Teachers are looking for jobs whilst the Rich decide whether to keep the yacht at its moorings. Annual mooring fees are probably the equivilent of that teachers salary (were she working) We are well and truly captured when the priority of government is prolonging the stay of the super yachts rather than introducing emergency job schemes.
To concentrate on the revenue lost to Jersey by this move is to ignore two other issues.
Firstly, this is a tax avoidance move to help EU residents (and others) bypass the EU VAT registration scheme (http://www.myyachtregistration.com/english/DeltaQuest_EU-VAT-for-yacht-registration). Is this really helping Jersey convince the world it is cleaning up its act?
Secondly, it is a move that completely ignores the needs of the local people. According to one of them: “… this is the next big plan at the expense of the small boat owners. Check tinyurl.com/yz3gy8l page 185 and you’ll see that they’ve approved over £17,000,000 in 3 phases, to turn our harbour into a marina that nobody, not even the boatowners want, and all this when we’re bankrupt for the rest of my life at least. Myra Shacklady, who seems to be in charge of all this, has assured us in the JEP that all those that wish to retain a mud mooring will be given one in the English or French Harbour or the South Pier. This is a promise impossible to keep. There are over 200 waiting for moorings now and boats are packed like sardines in the old harbour so there is no chance of an increase there.”
Although 10% of the replacement price for a large yacht is an accepted figure for the annual maintenance costs, that includes crew costs. How much of that money will flow to the Jersey Treasury, even indirectly? Since anyone buying into the Jersey VAT-avoidance scheme is likely to be the kind of person to avoid other forms of tax, Jersey will probably not see much of that other income. Although there will undoubtedly be a flow from maintaining the fabric of the boat and buying supplies, this money will go to private business while the Jersey tax payers pay for the harbour improvements required.
So Jersey is spending a mass of tax payers money on a scheme that benefits rich tax avoiders while simultaneously depriving ordinary people of the facilities they need to enjoy ordinary boating pleasures. What is fair or democratic about that?
Georges and Fred Fry are missing the point. Jersey no longer has a shipbuilding industry, so the yachts are not going to be bought here, only brought here. The tax relief will only be on the services and consumables used while moored.
I concur with Richard’s view that it is more about sending the message that the super-rich are so welcome that the ordinary locals will be swept aside for them, both to woo the former and to put the latter in their place, than about the revenue.
@David “The tax relief will only be on the services and consumables used while moored.”
No, it doesn’t matter where the yacht is made or bought, VAT has to be paid in the EU on the purchase price of the boat. See the first link in my earlier comment. This is a VAT avoidance measure.