Will vote for

[Voltaire]

I think Ian is a really nice guy, buy I am not sure that it would be a good idea for him to vote for T le S as Chief Minister, and so as he is going to vote this way I have to ask myself "would he have voted for GST" and I will leave you to work out that.

Up until I heard he would vote for T le S I had him down on my list, but as they say, its not over till the fat lady sings (which is about 8pm on 15th October).

[ianlemarquand]

Sam. Thank you for referring to me as a nice person. I think that you have misunderstood my position in relation to the next Chief Minister. What I am saying is that if elected I will vote for the candidate for Chief Minister who will, in my opinion make the best Chief Minister. Before so doing I would need to meet with all the candidates and discuss various issues with them. That is the only fair way to proceed. You must understand that I do not personally know all the potential candidates. Therefore, at this stage, I cannot rule anyone out. But I am certainly not committed to anyone.
In relation to GST my position is clear from my leaflet and from my website www.ianlemarquand.com . My position is that GST was the least bad of the three possible tax changes which were seriously considered. The main alternative was a wages tax and this would have hit hard the middle earners who are already being hit hard by 20 means 20. It would also have worked its way back into the economy via price increases. However, I am against GST on all food and drinks and on utility bills and heating for homes.   

[soon]

Ian, do you think that the 0/10 tax should have been introduced? Do you consider that there is sufficient independent (unspun) evidence that the EU authorities are satisfied with it? Do you think that the discrimination against Jersey companies is reasonable and/or wise? Do you think all reasonable options to fill the post 0/10 fiscal deficit were explored?

[ianlemarquand]

Soon. Thank you for your difficult questions. I am not a tax expert but looked at this some weeks ago and have delayed replying in order to look again. If I have misunderstood anything then please correct my misunderstanding. There were originally two main issues as follows:-
     a) the fact that much of Jersey's competition for financial business had lowered their tax rate to 10%; and
     b) the problem with the E.U. which objected to there being different rates of corporation tax for companies belonging to residents and non-residents and categorised this as an unfair tax practice.

0-10 is Jersey's response to this but, I believe, is the same as the response of Guernsey and the Isle of Man.

I do not know what alternatives were available in order to deal with a) and b). Do you have credible alternatives? If there are none then presumably 0-10 was the best.

In relation to the EU authorities, things appear to have gone quiet and so presumably they are satisfied at the moment. Do you have reason to believe that they are not?

Actually there is not discrimination between Jersey owned Companies and non-Jersey owned Companies, they are both 0 rated. The discrimination is between the owners of the Companies. If they are Jersey resident then they will pay tax in Jersey on the profits and if they are not then presumably they will pay tax wherever they are resident. This is because of the general rule that people only pay tax where they are ordinarily resident. This has the unfortunate effect that in relation to the activities of companies which are trading in Jersey, tax will not be paid in Jersey if their beneficial owners are non-resident. That appears to be a reason to ensure that the Regulation if Undertakings Law is used as much as possible to ensure that businesses are run by residents.
Another issue here is the suggestion put forward by Peter Blampied of a deemed rental charge. I would need to do further research in order to fully understand this proposal and I do not understand why progress has not been made with this. A further issue is the abolition of the old Schedule A income tax. I do not know when it was abolished but the old Schedule A meant that anyone owning property and deriving rental income in Jersey had to pay Jersey income tax upon the rent. Its abolition has made Jersey real property much more attractive for non-Jersey investors. There is a particular problem in relation to share transfer flats but the problem also extends to commercial property owned through a company.
Your last question relates to all reasonable other tax options. You will see what I am saying on my website www.ianlemarquand.com under GST. However, I have some further thoughts after looking ths morning at details of how GST was introduced in Singapore. In Singapore the government introduced GST with a raft of generous offsets in order to compensate those who were lower earners. These included lower income taxes, lower property taxes, rebates on rental and service charges for public housing and additional subsidies for health, education and community services. A major problem in Jersey is that he equivalent provisions have had to be dragged out of an apparently unwilling States when they should have been part of the package right from the start. I hope that I hve covered everything. As I said at the start, I am not an expert in this area.                   

[The Rev Peter Sarkey]

Ian, do you not think it would have possibly been more sensible for the Tax office to move the tax up one point in percentage terms as a short term issue. I am told that this would have covered the deficit that GST was brought in to cover and would not have required a sould to be employed to operate it?

[ianlemarquand]

Dylan. The gap which the States were seeking to plug was £45 million. Although in the short term the Island needed less, over a five year period it needed more. I do not know if you are aware that the projected loss for 2012 in the 2008 financial forecast is £27 million. If that is correct then the Island will need to find further tax revenue from about 2014. In relation to revenue from income tax, the figures which I have got appear to be contradictory. According to the 2005 fiscal strategy an increase in the standard rate of income tax of 1% would have only brought in an extra 4 million (the actual figure quoted is £20 million for an increase of 5%). I think that this must relate to tax on individual people only because the Annual Business Plan for 2008 contains an estimated income from Income Tax of £420 million. As the £420 million figure is projected to suffer as a result of 0-10 it must include tax on companies. Even if one took the £420 million figure and deducted the loss of 0-10 you would still only come out with a figure of about £17 million per 1 % increase. I do not know which figure is correct. Somewhere in my preparation for these elections I have picked up an increase of 3% in income tax as being necessary to cover the £45 million. On any of the figures it is clearly much more than the one per cent you suggest. However, Jersey already faces the difficulty that the Isle of Man has dropped its basic tax rate to 18%. Therefore, raising our basic rate even to 23 % would make us uncompetitive with both Guernsey and the Isle of Man. Also, the 20% rate has been a successful part of Jersey's tax strategy for a very long time and any decision to change it would need to be made with great caution. I am doing my best to answer your question but, as I have said before, this not one of my specialist areas of expertise. 

[The Rev Peter Sarkey]

Succinct Ian Succinct! I was not certain myself but your maths seems to explain it. Anyone else know different??

[soon]

Ian, thanks for your thoughtful responses on this matter. Like you, I am not a tax expert, and am struggling to educate myself on this. You seem to be well ahead of me.

Has the EU accepted that Jersey's 0/10 fiscal policies comply with its code of practice of practice on business taxation? I can find no evidence that they have. The weblink to the relevant states web page reveals a blank.
http://www.gov.je/TreasuryResources/IncomeTax/Bulletin+Board/JerseysCommitmentEUCodeConductBusinessTaxation.htm

A States commissioned report in 2005 pointed out that Jersey were proposing to make changes without seeking the views of the EU. http://www.taxresearch.org.uk/Documents/JerseyEUCodeReport15-6-05.PDF

John Christensen has recently expressed doubts as to whether the Jersey changes will be acceptable.

The main goal of Jersey's changes was to keep tax-free the SPV's, the heart of the profitability of the Jersey finance system.  They have been excluded from the 10% finance tax by complex means. Has the EU accepted that? Also, given that the collapse of Fortis might well be traced back to SPV's operating in Jersey that Fortis were unaware of when they took over ABN Ambro, there may not be much good will towards Jersey's interpretation.

Guernsey and the I.O.M.'s 0/10 fiscal policies are all different. I believe the I.O.M.'s changes have been declared non compliant with the EU code.

With regard to the size of the "black hole", the figures do seem to be a"shot in the dark", and their calculation depends on several uncertain figures.

My impression is that 0/10 was hustled through, a bit like several other major decisions in the last 2 years.

The global financial collapse has however now made most of this historical. If you bravely take up a post in the States in the next few weeks, my guess is that Jersey's fiscal policy will have to be completely re-engineered.

[ianlemarquand]

Soon. Thank you for attaching the relevant reports. Appendix 1 (The EU Code of Business Conduct for Business Taxation) would appear to be the most important. Paragraph B refers to measures as being potentially harmful. I can see from this that the EU could come to the conclusion that the Jersey 0-10 arrangements fell foul of this upon the basis of the overall package distinguishing between resident and non-resident owners of companies by virtue of the see through provisions. Whether they would then go on to find that the measures are actually harmful and what they would then seek to do about it are other matters. I have always assumed that the reason for the EU objection was that companies which were registered in Jersey were purporting to pay tax here whereas only a nominal amount of tax was being paid. It has always been open to other jurisdictions to apply their own see through provisions to their own residents and I suppose that that is what Jersey is trying to avoid. If the EU did disapprove of the new Jersey arrangements then Jersey would have to think again but I cannot speculate as to what the outcome would be. In any event, as the new arrangements will not come into effect until 2010 there is still some time to re-think if that is necessary. 

[ianlemarquand]

Soon. One further thing. You are right that the arithmetical effects of 0-10 are uncertain. The most recent estimations which I have seen have, if I have understood them correctly, come down to about £70 million from the original £100 million.

[moot]

Welcome on board this planet Ian
I have firmly decided on 4 of my 6 votes. Please enter in discussions of all types here and try to convince me to make you one of the last two as the hustings are not much use to me

[soon]

Ian, thanks for your response.

The expert report the States commissioned did suggest that the main aim was to keep SPV's tax free. However the States wanted to get tax from finance companies at a rate of 10%.  As the companies set up as part of the SPV's are finance companies there was a problem. The solution came from the fact that SPV's companies are set up as charities in Jersey. The JFSC does not regulate charities. Therefore the States will tax at 10% finance companies regulated by the JFSC. In this way the States think they will be complying with the EU code.

Northern Rock Bank had set up several such "charities" in Jersey.

Companies incorporated in Jersey and not regulated by the JFSC, including SPV companies, will under the new regulations pay no tax anywhere, as I understand it.

To go back to my main point, if someone is making all these enormous fiscal changes (20/20, 0/10, GST) to meet a code of practice it would seem wise to check that the interpreter's of the code accepted them. Where is the evidence that the States have this reassurance? There doesn't seem to be any. I hope I am wrong.

[Nellie Macon]

Ian is a really nice guy but I totally disagree with him over GST. The only reason the States went with this option was because it's like a tap, whenever they overspend - which if course they will - unless enough newbies get in and get the support of new deputies with more commonsense - then they will just put it up. They also didn't want to do anything to make the rich pay more (as these are all their buddies as well as themselves) so they decided that the taxpayers and poor could fund it all. Well of course the rich pay GST too but for them 3% is nothing, for the rest of us and the poor it really is terrible. There are so many other options - visit Geoff Southern's website and see for yourself but a 001% transaction fee on company bank transactions would be a start, you could up the annual company registration fee which they have already but it could go up some more without making a difference to potential clients, making the 1(1)Ks pay their agreed tax contributions, a charge equivalent to the recruitment fee on all Jcats etc. As for the ageing population, we should remove the Social Security contributions cap so that instead of being 6% only up to £40K+ it just continues. At present if you earn £80K you are only paying the equivalent of 3%. The arguement is that after paying 6% up to £40K the contributor would not get any additional benefit from paying this. In my experience it it those getting paid this sort of salary and higher that get all the bonuses whilst those at the lower end of the food chain rarely get anything (they're lucky if they even get a cost of living rise these days) so if they have to contribute a bit more then they can well afford it.

Paul Routier decided to waste a fund of XXM on free prescriptions when I never heard anyone complain about paying £1.50 for a prescription and formerly all poor people got free prescriptions under HIE anyway. This fund could have been used for many much better purposes eg paying for medication that the Health Department are denying patients because they are too expensive, discretionary assistance for those that don't qualify under the new Low Income Allowance - eg the man that had paid contributions for 35 years and had missed his last quarter's payments and then had an accident - whatever - to date Deputy Routier has wasted £6-7M on free prescriptions. It could have gone towards paying for flights for people needing treatment in the Uk or even towards equipment so that patients don't have to travel outside the Island .....so it goes on.

Please consider whether voting in a new candidate that is going to support retaining GST is worthwhile. Is anything going to change for the rest of us? Nitpicking what you pay GST on is going to get us into time consuming and costly dilemmas such as the definition of a Jaffa cake - is it a cake or a biscuit etc. What a waste of money.

Don't be taken in by all the complicated maths re GST, it's quite simple, remove it and replace it with something acceptable to the Jersey people. It's irrelevant whether the States prefer this option or not, if the people hate it then we shouldn't have it. Go for something else that we will accept and that doesn't penalise the old, the poor, those with families and the poor longsuffering middle income taxpayer. Try taxing those who can afford to pay it for a change - in particular the companies who benefit from operating in Jersey.

Don't believe that rubbish about losing business if we didn't remove exempt tax either. The Isle of Man removed it and are leeching business, yet Luxembourg and Switzerland who have retained it are booming. They told the OECD to get lost and they'd decide their own fiscal rules but as usual we gave in to the OECD bullies and look what a mess we're in now.

It's not true that Jersey owned Jersey businesses aren't going to be penalised under this new system because they are going to introduce the Deemed Distributed Law next year which means Jersey owners of Jersey companies get taxed on the profits from their companies whether they receive a distribution or not. This will mean that they all have to pay top rates for Social Security. For really small businesses this will probably mean they go out of business. So much for a "level playing field" - as usual the poor Jerseyman catches it in the neck whilst mega rich foreign owners of Jersey companies pay nothing. This sounds fair to our States members - I wonder who holds the shares in their companies?

At a recent meeting for local accountants at the Hotel de France it was agreed that no-one understood 0-10 completely - well, if they don't, I wonder who really does, and whether the States have any real idea of the sums involved? Is this extraordinary complication necessary so that ordinary people cannot see that they are being made to pay much more than is necessary and will the States give us a refund once they have filled the "black hole" of their own making?

[The Rev Peter Sarkey]

Why aren't you standing Nellie and getting the girlie vote?

[Nellie Macon]

Sorry, the figure for the transaction fee should be 0.0001% not 0.001% as stated last night - it was pretty late when I wrote that.

I'm still considering standing for Deputy if Jeremy gets in as a Senator but really I'm not a great speaker, I'm much better as a writer and researcher. Jeremy is the one who can think on his feet and come back with a good reply. I need time to think about it and will probably change the wording a few times before I'm satisfied with it.

I have just started a great job and after searching for this for so long am loathe to give it up. My husband also isn't keen for me to seek election as we will have less time to spend together than we do now. Having said that, he would not oppose me doing so if that was my choice.