Jersey must not shift the burden of EU compliance onto its poor

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There was a great letter inn the jersey Evening Post yesterday from my friend Pat Lucas. It said:

THE JEP (1 June) reports that Jersey faces a review by the EU Code of Conduct Group on Business Taxation in September over the discredited ‚Äòzero-ten’ corporate tax system.

As many of us know, Jersey has a multi-tier tax system where foreign or non-Jersey companies pay a zero-rate which means they pay no tax at all, finance firms are only required to pay ten per cent tax while individuals pay 20 percent income tax.

This Island now faces a £100 million tax deficit per year, so despite the fact that 20,000 Islanders signed a petition against it, the States have adopted a three per cent Goods and Services Tax which shifts the tax burden away from businesses and those who can well afford to pay a fair tax and onto those who can ill afford to pay. Grossly unfair!

The EU is concerned that the zero-ten tax policy does not meet the spirit of the Code of Conduct on harmful tax practices. Frankly, I have to agree with them. But we in Jersey already pay extortionately high prices for housing and the overall cost of living is far higher than in the UK, despite the 17.5 per cent VAT rate on most goods and services in the UK.

Ordinary people have to pay a very high price indeed for the pleasure of living in a tax haven, and the price will be very much higher, once the GST rate is raised to tackle the budget deficit. GST is a deeply regressive tax. No amount of Social Security will rectify this. It simply means that the rich will get richer and the poor, poorer.

Commenting on the GST earlier this year, Richard Murphy of Tax Research, who warned the States of Jersey against adopting GST in 2006 writes:

‚ÄòAnd now I note it is forecast to rise to 12% – by Jersey’s own civil service. ‚ĶIt’s another sign of reverse socialism and Jersey had been warned. Ordinary people in Jersey are funding a tax haven.’

I would ask Chief Minister Le Sueur, who is reported as saying ‚ÄòJersey is going to have its tax system assessed and as far as I am concerned that is fine because it actually gives us greater clarity’, to please listen to the message rather than simply trying to discredit the messenger.

Try to meet the spirit of the Code of Conduct without further shifting the tax burden onto those least able to afford it.

Well said Pat.

But will they listen?