Jersey Lawmakers Affirm 20% PIT Rate

By ExpatBriefing.com Editorial 08 April, 2011

Jersey’s Treasury Minister, Phillip Ozouf has welcomed support for the island’s flat 20% personal income tax rate in a recent States debate, where a majority of deputies in Jersey’s legislative assembly dismissed a proposition lodged by Deputy Peter Southern to introduce progressive personal income taxation in Jersey.

Southern's proposition, introduced in February, asks the States to support "the principle of progressive taxation through the introduction of higher rates on personal income tax for those individuals with higher incomes.” Southern proposed that legislation be enacted:

On the taxation of high-net-worth individuals (HNWIs) residing in Jersey under the 1(1)(k) regime, Southern proposed an increase to the rate of taxation these individuals pay on their worldwide income, in line with the other proposed increases.

Currently HNWIs under the 1(1)(k) initiative pay a rate of 20% on the first GBP1m of their worldwide income, 10% on the next GBP500,000, and 1% on income thereafter. In December 2010 Treasury Minister Ozouf announced that the government would increase the minimum tax payable by new applicants to the regime to GBP125,000 per annum but revise the rates applicable to 1(1)(k) taxpayers' income, to a 20% rate on the first GBP625,000, and a 1% rate on other income thereafter, in an effort to increase the number of HNWIs applying for tax residency in Jersey.

Southern has instead argued that Jersey would be better-served by an increase in the rate applicable to HNWIs' income to 25% in the year of assessment 2012, and to 30% in the year of assessment 2013, but did not prescribe at what threshold the 1% rate should kick in.

Both proposals were rejected when the States met on April 6.

Welcoming the outcome on April 7, Ozouf stated on his personal blog:

“The 20% flat rate of income tax has been the foundation of our post-war success and 1(1)k’s benefit our economy.”

“This vote sends out a message of stability in the island’s main industry.”

“The Treasury conducted a wide-ranging consultation on personal taxation last year, after which the Council of Ministers supported the conclusion that a higher rate of income tax would have negative consequences. States Members then approved the 2011 budget. That sent a strong and powerful message that we support maintaining the foundation of our economy – our 20% income tax rate. This has been reconfirmed today.”

“I hope today’s resounding vote ends all speculation that the island is anything other than committed to the long-standing standard tax rate of 20%.”

Tags: Individuals | Expatriates | Tax | Investment | Fiscal Policy | Jersey | Offshore | Legislation | Tax Rates | Individual Income Tax |

 





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