Income tax calculations (FOI)
Income tax calculations (FOI)Produced by the Freedom of Information office
Authored by Government of Jersey and published on 17 January 2022.
Prepared internally, no external costs.
How much more tax would be generated if Jersey's maximum income tax rate increased to;
Could the data be provided from what Reform proposed?
The information as requested is not held in a recorded form. In order to answer the request, the data would need to be extracted from various sources and manipulated. Aside from taking more than the prescribed 12.5 hours to do that work, the Freedom of Information (Jersey) Law 2011 does not require a Scheduled Public Authority to manipulate data in order to provide a response. Article 16 of the Freedom of Information (Jersey) Law 2011 has therefore been applied.
This question has been interpreted as raising the maximum tax rate of 20% to each of the provided rates. This would require a recalculation of each assessment to determine the impact this change may have. It is not possible to do this within the timescale.
For an individual, the current standard rate of tax is 20%. There is also a marginal rate of tax of 26%; under the marginal rate calculation the Law provides allowances and deductions. A taxpayer will be charged on the lower of the two calculations and so not pay more than 20% tax on their total income.
If the intention is to raise the standard rate of tax only to 22.5% and 25%, and to retain the current marginal rate of 26% and current allowances, a taxpayer who is currently assessed under standard 20% rate may now be assessed under the marginal rate of tax as it provides a lower tax figure. Therefore dependent of the circumstances of each taxpayer the contribution from higher standard rates will vary.
Revenue Jersey are aware that some standard rate taxpayers know that they do not benefit from any deductions at the marginal rate of tax (e.g. child care or mortgage interest relief) and do not submit that information on the tax return form, or alternatively allow others to claim certain tax allowances such as for children. It is therefore not possible to accurately determine the liability at the marginal rate to calculate the effect this proposal may have on them.
This issue is further complicated by tax credits that may be available from income such as shareholder distributions. In terms of foreign dividends there will be additional credits which would reduce the tax assessable in Jersey. For domestic companies, if the intention were to also raise the rate of tax incurred by these companies as well, there may be no effect upon the individual taxpayer, or a further requirement to calculate additional tax on the distribution received.
Finally, with any variation in the income tax rate, there may be some behavioural change expected, and the effect of this cannot be estimated.
Article 16 - A scheduled public authority may refuse to supply information if cost excessive
(1) A scheduled public authority that has been requested to supply information may refuse to supply the information if it estimates that the cost of doing so would exceed an amount determined in the manner prescribed by Regulations.