24 October 2008
Jersey is well-placed to deal with the impact of the present turbulent international financial markets, and despite the recently agreed spending increases, the Island ’s financial position is still balanced and healthy over the forecast period, according to the Treasury and Resources Minister in his 2009 budget, published on Tuesday 21st October.
Senator Terry Le Sueur has also announced a range of benefits for low and middle earners to help them cope with recent price increases, particularly in food and fuel costs. Among the measures proposed are a five per cent increase in income tax thresholds, no fuel duty increase planned for 2009, and significant discounts for first time property buyers, including no stamp duty payable on homes worth up to £300,000 and a significant discount on stamp duty for properties of up to £400,000.
The Minister will also bring proposals alongside the budget to put in place the targeted benefits for those most affected by the higher food and fuel prices agreed by the States last month.
Commenting on the 2009 budget proposals, Senator Terry Le Sueur said: “Despite the increases in spending agreed following the amendments to the business plan our financial position is still balanced and healthy over the forecast period. Our policies have been successful in encouraging further real economic growth in 2007 which in turn has boosted tax revenues. While there are risks associated with the global credit crunch, as we move forward we are in a sound position to address these future challenges.”
”The increases in tax thresholds, together with associated enhancements to benefits for non-taxpayers, are designed to assist low and middle earners affected by food and fuel inflation, and also to help reduce the impact of GST. If approved, the increase in tax thresholds will mean a working couple with two children (one at university), paying £7,500 in mortgage interest, can earn more than £41,000 a year before they start to pay any income tax.”
He continued: “Meanwhile the removal of stamp duty on properties up to £300,000 and a bigger discount on stamp duty for first time buyers on homes up to £400,000 is intended to help people entering the property market at this difficult time.”
The Minister has accepted a recommendation by the Fiscal Policy Panel advising against any further transfers to the Stabilisation Fund at this stage, in recognition of the possibility that lower rates of economic growth will reduce tax revenues and increase public spending.
The Fiscal Policy Panel will be providing an update ahead of the budget which will take account of recent changes in global financial markets and will be available to inform the budget debate.
The budget proposals for 2009 focus on three main areas; income tax, impôts duty and stamp duty. A summary of the proposals follows:
increase tax exemption thresholds by 5% for 2009
Extend the range of incentives to save for retirement, including raising the level of pension contributions eligible for tax relief and recognising employer contributions into personal pension products.
Extend child care tax relief to cover the employment of all nannies accredited to the Jersey Child Care Trust.
Introduce a new Deemed Rental Charge (the “Blampied” proposal) for non-finance non Jersey companies as part of the provisions within the 0/10% corporate tax structure.
Impôts Duty Proposals
Defer any increase in fuel duty on all road fuel for 2009;
Increase the duty on alcohol by 5.6% and on tobacco by 6% in accordance with the States alcohol and tobacco strategies, representing:
- 49 pence on a litre of spirits
- 6 pence on a bottle of wine
- 1 penny on a pint of ordinary beer
- 18 pence on a packet of 20 cigarettes
The Minister is proposing the deferral of any increase in fuel duty as part of a package of measures recognising the higher price of hydro-carbon fuels, and follows increases to benefits for winter fuel and income support in the Annual Business Plan.
Stamp Duty Proposals
Remove all stamp duty for first-time buyers up to £300,000
Increase a new band of £300,000 to £400,000 at which first-time buyers will also receive a discount on their stamp duty
Introduce a new Land Transactions Tax for residential property share transfer transactions in 2009
The new Land Transactions Tax for residential property share transfer transactions has been developed in response to a States decision in 2005 and is intended to increase the equity in the property market by introducing a tax equivalent to stamp duty for share transfer properties.
Review and Consultation
The Minister is also announcing that there are three main areas where reviews and/or consultation are intended during 2009:
- further options for a new environmental tax, required to provide revenues to support the longer-term environmental spending initiatives, as approved by the States in the Annual Business Plan 2009.
- potential further changes to stamp duty, which include;
- consideration of an increase in the bands of stamp duty for higher value properties;
- levels of duty on re-registration of existing borrowings; and
- the recommendation of the Corporate Services Scrutiny Panel to consult further on commercial property share transfer.
- the duty concession for marine pleasure craft (in conjunction with the Economic Development Department)
The Treasury Minister’s proposals will be debated by the States on 2 December 2008.