18 October 2016
Budget 2017 supports the priorities of the Medium Term Financial Plan, which set the direction for the island’s public finances for the next three years. This Budget helps provide the flexibility Jersey needs in an uncertain global economy and maintains momentum towards balanced budgets. It also proposes £65 million of investment in schools, infrastructure and IT systems.
Budget 2017 proposes changes in personal tax and impôts, it introduces the legislation that will allow the States to pay rates and it increases stamp duty for high value properties. It proposes no fundamental change to Jersey’s system of taxes, duties and charges. This system is founded on the Island’s long term tax policy principles which state that taxes should be low, broad, simple and fair.
The Treasury and Resources Minister, Senator Alan Maclean, said “This Budget helps lower and middle earners by increasing our generous tax free allowances for personal income taxpayers by the rate of inflation. This will increase the amount people can earn tax-free, which leaves taxpayers on the Marginal Rate with more disposable income.
“We are helping working parents with the cost of child care and we are reducing the tax paid by working couples who are married or in a civil partnership. This change improves fairness between married and unmarried working couples and encourages work.
“For pensioners we are creating more flexibility to draw down money from their pension pots. We are also introducing powers to enable the Taxes Office and States Police to collaborate in tackling financial crime. We will offer a Voluntary Tax Disclosure Opportunity so Jersey taxpayers can bring their tax affairs up-to-date before penalties are strengthened. Over the next few Budgets we will introduce new legislation to modernise our tax system and add to the powers of the Taxes Office.
“At the same time we propose to increase duty on tobacco, alcohol, fuel and vehicle emissions. These items damage our health and environment and put pressure on public finances.”
A number of reviews are underway into various aspects of Jersey’s personal tax system and their outcome will inform the development of a sustainable funding mechanism for the growing cost of health and social care. The information provided will also improve understanding of the Island’s taxes system.
Senator Maclean added “This Budget recognises the need to find an acceptable funding mechanism for the growing cost of health services. Ministers remain committed to the important investment in health and social care that was outlined in our financial plan. But we are also committed to ensuring that we can afford the investment and that it does not undermine our progression towards sustainable finances.
“We are considering how to achieve this planned investment in a sustainable, affordable way. We will engage with States Members as we develop options for replacing this essential income and firm proposals will be brought forward by Budget 2018. This timescale will allow time for workshops with States Members and for the review of personal income tax data to be completed.”
Budget 2017 also allocates £65 million for capital spending. This includes £39 million for Les Quennevais School and funds to start phase five of the work on Grainville School. There is also £8 million for a new computer system for the Taxes Office and funding for more work on the new sewage treatment system.
This Budget proposes modest changes that will maintain and slightly increase States revenues and build flexibility into the government’s plans.
Senator Maclean added “Despite global uncertainty our economy is responding better than expected, with record employment, return to economic growth and earnings above inflation. Our finances are strong and we have a robust balance sheet. However the FPP has warned that the economic conditions and uncertainty facing the Island in coming years means we must ensure additional flexibility.
“This Budget is part of a three year plan that draws on reserves to support the economy in the short term and works to balance budgets in the medium term. We will continue to draw on the expert independent economic advice as the local and global outlook changes and we will ensure we maintain enough flexibility in our plans to respond to any changes.”
This Budget uses the latest economic and tax forecasts. Updated economic assumptions and States income forecasts will be issued next spring.