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Jersey's Treasury Minister Responds To Budget Criticism

by Jason Gorringe, Lowtax.net, London
16 December, 2015

Alan Maclean, Jersey's Treasury and Resources Minister, has responded to criticism from the Corporate Services Scrutiny Panel in a report on the draft 2016 Budget.

The Scrutiny Panel criticized the proposal to phase out mortgage interest tax relief (MITR) over a ten-year period, saying that the measure's potential impact is unclear. Maclean rejected this, pointing to a PwC report commissioned by the Department that specifically addressed MITR.

Maclean said this and other reports "highlight what has happened in other jurisdictions and there is nothing to suggest that the impact of phasing out this relief would be any different in Jersey. The model that we have used is in keeping with that used in other jurisdictions where this relief is being phased out, including Guernsey."

The Panel was also critical of plans to phase out age enhanced exemption thresholds under the personal income tax regime. Only those who turn 65 before January 1, 2017, will continue to be eligible.

The Panel said the eventual withdrawal of age enhanced exemption thresholds will adversely impact pensioners. It recommended that the age enhanced income tax exemption thresholds for taxpayers aged over 65 should not be removed from the year of assessment 2018 for taxpayers reaching the age of 65 after January 1, 2017. Further it said the age exemption thresholds should not be held at 2016 levels and instead should continue to rise in line with standard exemption thresholds.

Maclean responded stating: "The Budget proposals support the strategic priority of delivering sustainable public finances in the face of an ageing demographic and does so in a way which avoids taxpayers experiencing a major change in their tax position."

"It is important that we are clear that this measure will only affect people who do pay tax because they have an income above the exemption threshold. Low-income pensioners are not affected. The high level of the age enhanced exemption thresholds mean that just under 50 percent of individuals aged 65+ are exempt from income tax. Further, in September 2015 "pensioner RPI" was reported at -0.6 percentage, indicating that the cost of living is currently falling for those aged 65+."

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