Consultation about retail tax (FOI)

Request

During the 2018 Jersey Budget Debate on 30 November 2017, when the Treasury Minister was summing up Senator Maclean made reference to a consultation which he and his department had carried out with regards the new 20% Retail Tax.

I would like to know the following information:

• the names of the 30 companies contacted

• the names of the people contact at each of the 30 companies

• the date which the 30 invitations were sent

• a copy of the written invitation

• how were the invitations sent (eg email or post)

• the names of the 10 retail companies which engaged and attend the consultation meeting

• a copy of the meeting agenda

• what attempts were made to ensure complete engagement with the subsequent 20 companies

• what form did the consultation take? Such as round-table discussions, questionnaires, impact assessments and so on 

• I would like to see a copies of all documents, regarding the 20% retail tax, that were presented to those retailers who attended the consultation meetings

• the Minister said the consultation had taken place one year before the budget. What other forms of consultation were carried out during that twelve month period?

I would also like to see a copy of all supporting fiscal analysis and research, which was used to produce the retail tax appendix in the 2018 Jersey Budget.

Response

The States Assembly resolved “in principle” to subject large corporate retailers to a positive rate of corporate income tax in December 2016 as part of the Budget 2017 debate, subject only to being satisfied that the introduction of such a measure would not “pose a risk to the zero-ten regime”. The voting can be viewed at the following link:

Draft Budget Statement 2017

Senator Sarah Ferguson originally proposed the taxation of large corporate retailers and based her proposal on the approach adopted in Guernsey from 2016; an approach which sees corporate retailers taxed at 20% on all their retailing profits once those profits exceed £500,000*. See link below:

* Extract from Draft Budget Statement 2017 (Fourth Amendment)

The Council of Ministers proposed an amendment, adopted by the States Assembly, which allowed for some flexibility in the final form of the measure (ie the measure introduced in Jersey need not be a carbon copy of Guernsey’s approach)**. See link below:

** Extract from Draft Budget Statement 2017 (Fourth Amendment)

The wording of the proposition adopted by the States Assembly is outlined below:

“to agree in principle that from 2018 a higher rate of tax on profit should be applied to retail businesses operating in Jersey, whether owned by Jersey resident companies or by non-resident companies, where annual taxable profits exceed a certain threshold (which is to be determined during 2017) providing this does not pose a risk to the zero-ten regime and to direct the Minister for Treasury and Resources to bring forward the necessary legislative changes for debate by the Assembly during 2017”

Correspondingly the work undertaken by the Treasury during 2017 focused on:

• ensuring that the proposed extension of the positive rate of tax to large corporate retailers would not pose a risk to the zero-ten regime; and

• considering the design of the taxation measure that would ultimately be lodged with the Assembly

As part of this work, the Treasury examined the large corporate retailer taxes introduced in the Isle of Man and Guernsey; seeking the views from the tax authorities in both jurisdictions of their experiences, in particular regarding implementation challenges. The Treasury also discussed, on a confidential basis, the emerging proposals for the design of the taxation measure with the Island’s larger accountancy firms.

In addition, despite not being required by the decision of the States, economic and distributional impact analysis was commissioned to inform the considerations of Ministers and States Members and the resulting conclusions were published in Appendix 11 of the Draft 2018 Budget Statement***. See link below:

*** Draft Budget Statement 2018

Statistical information was provided by the Taxes Office to the Economics Unit under the provisions of Article 13 of the Income Tax (Jersey) Law 1961 in order to assist in the preparation of Appendix 11. The Comptroller of Taxes considers that publishing this information would be a breach of the Oath of Office with regard to the duty to maintain taxpayer confidentiality. Consequently, it is considered Absolutely Exempt Information under Article 29 (other prohibitions or restrictions) of the Freedom of Information (Jersey) Law 2011.

Following discussions at Council of Ministers meetings in September 2017 the proposed taxation measure was at an appropriate stage in order to undertake closed consultation with those retail companies potentially impacted.

Clear proposals were presented to invited retail companies and representative bodies at two meetings on 20 and 21 September 2017, before the draft Budget Statement containing definitive proposals was lodged on 3 October 2017. A copy of the presentation is annexed to this reply.

Invitations to the presentations were sent on 15 September by email.

The invitation to these meetings is reproduced below:

Dear Sir / Madam,

Private and Confidential

As you may be aware in last year’s Budget the States Assembly agreed the following proposition:-

“to agree in principle that from 2018 a higher rate of tax on profit should be applied to retail businesses operating in Jersey, whether owned by Jersey resident companies or by non-resident companies, where annual taxable profits exceed a certain threshold (which is to be determined during 2017) providing this does not pose a risk to the zero-ten regime and to direct the Minister for Treasury and Resources to bring forward the necessary legislative changes for debate by the Assembly during 2017”.

Under this proposition the Minister for Treasury and Resources is required to bring forward appropriate tax changes in the forthcoming Budget (scheduled to be lodged on 3 October 2017). The Minister is currently finalising his proposals and is seeking to engage with potentially impacted companies in advance of the Budget being lodged.

As such officers from the Treasury will be hosting private and confidential briefings on the current proposals on Wednesday 20 September 2017 from 2pm – 3pm and Thursday 21 September 2017 from 2.30pm – 3.30pm at a venue (in town) to be confirmed.

If you wish to attend one of these briefings please notify [name redacted].

As part of the presentation, there was an invitation to raise any significant policy issues with the Minister for Treasury and Resources.

Where retail companies were unable to attend one of these briefings there was an opportunity to arrange private briefings; one retail company took up the opportunity of a private briefing.

It is also noted that the Budget proposals are lodged with the States Assembly for a period of eight weeks to allow additional time for scrutiny of the Budget proposals by States Members, interested parties and the general public.

The Comptroller of Taxes considers that exposing the names of the retail companies who were invited and/or who engaged with the Treasury would be a breach of the Oath of Office with regard to the duty to maintain taxpayer confidentiality. Consequently, it is considered Absolutely Exempt Information under Article 29 (other prohibitions or restrictions) of the Freedom of Information (Jersey) Law 2011. The Comptroller notes that few retail companies have openly confirmed or denied whether they are affected by the measure.

Exemption applied

Article 29 Other prohibitions or restrictions

Information is absolutely exempt information if the disclosure of the information by the scheduled public authority holding it –

(a) is prohibited by or under an enactment; (b) is incompatible with a European Union or an international obligation that applies to Jersey; or (c) would constitute or be punishable as a contempt of court.

Members of the Income Tax office are prohibited from disclosing information by virtue of Part 3 and Schedule 1 to the Income Tax (Jersey) Law 1961 whereby the Comptroller (and Deputy) and Officers of that department take an Oath of Office before the Royal Court which provides, inter alia, that:

“you will not disclose any information which may come to your knowledge in the performance of your duties, except to such persons only as shall act in execution of the said laws and where it shall be necessary to disclose the same to them for the purposes of the said laws, or in so far as you may be required to disclose the same for the purposes or in the course of a prosecution for an offence against the said laws.”

Therefore, the information requested is absolutely exempt information under Article 29 of the Freedom of Information (Jersey) Law 2011, because the disclosure of the information by the Scheduled Public Authority holding it is prohibited by or under an enactment.