Treasury and Resources
Ministerial Decision Report
2013 Budget proposition and Draft 2013 Budget Statement
- Purpose of Report
The purpose of this report is to enable the Minister for Treasury and Resources to lodge the 2013 Budget Proposition and the Draft 2013 Budget Statement.
- Background
The 2013 Budget Proposition and the Draft 2013 Budget Statement detail the proposed tax measures to be introduced.
- Proposals
The 2013 Budget Proposition is to ask the States to decide if they approve:
- the estimate of total taxation revenue in 2013 of £614,829,000 to be raised through existing taxation measures and the proposed changes to income tax, goods and services tax, impôts duty, stamp duty and land transaction tax for 2013;
- a capital head of expenditure for each of the capital projects for States funded bodies to be started or continued in 2013 (other than States trading operations) totalling £56,127,000, that require £12,566,000 to be withdrawn from the consolidated fund; and
- each of the capital projects that are scheduled to start during 2013 in the recommended programme of capital for each States Trading Operation, that require funds to be drawn from the trading funds in 2013.
The Draft 2013 Budget Statement details the proposed changes to income tax, goods and services tax, impôts duty, stamp duty and land transaction tax for 2013. A summary of the proposed measures is listed below:
Income Tax Proposals
Unless specifically stated, all changes come into effect for year of assessment 2013.
Exemption thresholds
The Minister proposes to increase the income tax exemption thresholds for the year of assessment 2013 by 3% in line with the increase in inflation to June 2012 to protect those households on lower incomes.
Allowances
It is proposed to retain allowances at the same level as in 2012.
Taxable distributions
It is proposed to redefine, and extend, the definition of what constitutes a taxable distribution from a Jersey resident company to safeguard tax revenues.
Intermediate Service Vehicle (personal services company)
Introduce specific ‘personal service company’ legislation to safeguard tax revenues.
Amending the “group relief” rules for certain companies
Amend the Income Tax Law to ensure that profits which should be taxed at 20% are not reduced by losses from a 0% company.
Benefit-in-kind exemption for directors
Amend the Income Tax Law regarding a specific exemption from income tax that exists for controlling shareholders to ensure that it is not subject to abuse.
Exemptions for non-residents
Amend the Income Tax Law regarding the payment of dividends to non-residents to ensure that the existing law is not open to abuse.
The amendment will be effective from the date on which the 2013 Draft Budget Statement is lodged on 17 October 2012.
Repeal of income tax relief on life insurance premiums
Remove the availability of income tax relief on premiums paid for life insurance cover in accordance with the ’20-means-20’ commitments.
Rental income of non-resident landlords – penalty regime
Amend the income tax law to ensure the penalty regime relating to non-resident landlords works as it was intended.
Additional personal allowance
Amend the Income Tax Law to ensure that this allowance is not available to married taxpayers except in certain circumstances, as was intended.
Enhanced ITIS measures
Extend the Comptroller’s power to enable him to issue estimated assessments to those non compliant employers followed by legal proceedings if that estimated tax is unpaid, in cases where an employer has not complied with their ITIS obligations.
Long standing ‘concessions and practice’
To promote consolidation and simplification, three of the long-standing concessional practices will be embedded into the Income Tax Law. These are as follows: (i) dividends paid by the Channel Islands Co-operative Society Ltd will not be regarded as taxable income; (ii) war widows’ pensions and war disability pensions, regardless of which government they are paid by, will not be regarded as taxable income; (iii) allow a loss arising from non Jersey possessions to be offset against other taxable income from non Jersey possessions in the same tax year.
Exemptions for private medical insurance
Remove an ineffective piece of income tax legislation. This relates to employee private medical premiums which are paid by their employer and are exempt from the charge unless the employee has claimed income tax relief themselves.
Goods and Services Tax Proposals
Bad debt relief
Amend the GST Law to include the practice that applies regarding relief on bad debts.
Share transfers on domestic property
Amend the GST law to align the GST treatment of transactions in residential properties which are sold directly, with those properties sold by way of share transfer.
Impôts Duty Proposals
Increase the duty on alcohol, tobacco, fuel and VED by the following:
- A 10% increase on all spirits and wines.
- An 8% increase on strong beer and cider (exceeding 4.9% abv).
- A 5% increase on weaker beer and cider (not exceeding 4.9% abv).
- An increase to the rate of duty on all tobacco products by 10%.
- An increase to the rate of duty on all fuels by 3p per litre.
- An increase to all Vehicle Emissions Duty bands of 5%.
Stamp Duty and Land Transaction Tax Proposals
First time buyers
Extend the reduced rate of Stamp Duty and Land Transaction Tax charged to first-time buyers of properties which was introduced in Budget 2012. This is a temporary measure, intended to take effect from 1 December 2012 to 31 December 2013 to act as a stimulus for the housing market.
Probate Duty
Reintroduce a cap on the amount of probate duty that is payable on an estate. The effect of this cap is that the maximum amount of probate duty payable on an estate is capped at £100,000 and is intended to enhance Jersey’s competitiveness and remove a barrier to investment in the Island by non-residents.
Stamp duty court fees
Introduce Stamp Duty court fees for contested Petty Debts Court hearings. The proposal is to continue to exempt payment for the applications and trials in cases where the claim is up to £3,000 but to introduce a charge of £300 per day or any part of a day in those cases where the claim exceeds £3,000.
- Recommendation
It is recommended that the Minister for Treasury and Resources approve the 2013 Budget Proposition, the draft 2013 Budget Statement and the Decision Summary.
- Reason for Decision
The 2013 Budget proposition and draft 2013 Budget Statement are to be lodged “au Greffe” at least 6 weeks prior to debate on 4 December 2012, as required by the Public Finances (Jersey) Law 2005.
- Resource Implications
The proposals within the Draft 2013 Budget Statement will be implemented without any increase to current approved staffing levels.
The tax measures within the Budget are broadly neutral and, together with the Duty increases and existing measures, will deliver taxation income of £614,829,000 and contribute to total States income of £647,044,000, in accordance with the 2013 draft Medium Term Financial Plan.
Report author : Director – Tax Policy | Document date : 11/10/12 |
Quality Assurance / Review : Business Manager | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2012-0089 -\WR 2013 Budget Proposition and Draft 2013 Budget Statement.doc |
MD sponsor : Treasurer of the States |
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