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Information and public services for the Island of Jersey

L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

2015 Budget Proposition and Draft 2015 Budget Statement

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

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A decision made on 17 July 2014:

Decision Reference:  MD-TR-2014-0076

Decision Summary Title:

2015 Budget Proposition and Draft 2015 Budget Statement

Date of Decision Summary:

15 July 2014

Decision Summary Author:

Comptroller of Taxes

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title:

2015 Budget Proposition and Draft 2015 Budget Statement

Date of Written Report:

15 July 2014

Written Report Author:

Comptroller of Taxes

Written Report :

Public or Exempt?

Public

Subject:

2015 Budget Proposition and Draft 2015 Budget Statement.

Decision(s):

 The Minister approved the following for lodging “au Greffe”:

  • 2015 Budget Proposition; and
  • Draft 2015 Budget Statement.

Reason(s) for Decision:  

The 2015 Budget proposition and draft 2015 Budget Statement are to be lodged “au Greffe” at least 8 weeks prior to debate on 22 September 2014, as required by the Public Finances (Jersey) Law 2005.

Resource Implications:

The proposals within the Draft 2015 Budget Statement will be implemented without any increase to current approved staffing levels.

 

The financial implications of the Budget proposals in 2015 would be an increase to States revenues of £962,000 compared to the forecast from the 2014 Budget with the impact of the income tax measures which relate to income tax year of assessment 2015 not impacting on States revenues until the financial year 2016 when the financial implications are estimated to be an increase of £2,662,000.

Action required:

The Greffier of the States is requested to lodge “au Greffe” the 2015 Budget Proposition and draft 2015 Budget Statement attached to this decision, on Friday 18 July 2014 together with the Report, with a request for debate on 22 September 2014.

Signature:

 

 

 

 

Position: Senator  P F C Ozouf, Minister for Treasury and Resources

 

                 

 

Date Signed:

 

Date of Decision:

Hide report
2015 Budget Proposition and Draft 2015 Budget Statement

Treasury and Resources

Ministerial Decision Report

 

 

 

2015 Budget proposition and Draft 2015 Budget Statement

 

 

 

  1. Purpose of Report

The purpose of this report is to enable the Minister for Treasury and Resources to lodge the 2015 Budget Proposition and the Draft 2015 Budget Statement.

 

 

  1. Background

The 2015 Budget Proposition and the Draft 2015 Budget Statement detail the proposed tax measures to be introduced.

 

 

  1. Proposals

The 2015 Budget Proposition is attached and asks the States to agree:

 

  • the estimate of total taxation revenue
  • the capital programme for 2015 for both non trading and trading departments
  • the rules for the operation of the Housing Development Fund, the Strategic Reserve and the Stabilisation Fund
  • to request the Jersey New Waterworks Company Limited to repay the States of Jersey all of the Fifth Preference Shares
  • the funding proposals for the major capital projects for hospital services and facilities and for new sewage treatment works

 

The Draft 2015 Budget Statement details the proposed changes to income tax, goods and services tax, impôts duty, stamp duty and land transaction tax for 2015. A summary of the proposed measures is listed below:

 

Income Tax Proposals

 

Unless specifically stated, all changes come into effect for year of assessment 2015.

 

The Minister proposes the following.

 

Exemption thresholds

 

The income tax exemption thresholds for the year of assessment 2015 shall increased by 1.7% in line with the increase in inflation to 31 March 2014.

 

Allowances

 

The allowances will remain at the same level as in 2014.

 

 

Cap Mortgage Interest Tax Relief

 

The Income Tax Law is amended to provide that the amount of Mortgage Interest Tax Relief that can be claimed in respect of a taxpayer’s only or main residence is capped at £15,000.

 

Income Tax Instalment System (ITIS) –taxpayers put on a current year basis upon returning to the Island

 

The Income Tax Law is amended such that a returning taxpayer, provided he/she has been non-tax resident in the Island for at least one year, pays their tax through ITIS on a current year as opposed to previous year basis.

 

Double Tax Credit

 

The Income Tax Law is amended so that marginal rate taxpayers will become entitled to double tax credits where Double Tax Agreements are in place.

 

Companies supplying Hydrocarbon Oil

 

The Income Tax Law is amended to ensure that companies that supply hydrocarbon oil (except those companies which only supply hydrocarbon oil through forecourt operations) pay tax at 20% on all of their profits generated from this activity.

 

Pensions and Pension Schemes

 

Income Tax (Amendment No. 44) (Jersey) Law 201-, which makes the legislative changes required to introduce the new rules applying to pensions and pension schemes, is being lodged alongside the 2015 Budget and is subject to a separate Decision Summary and Written Report.

 

Goods and Services Tax Proposals

 

Credit for, or repayment of, overstated or overpaid GST

 

The Goods and Services Tax Law is amended to shorten the period within which refunds of overpaid GST can be claimed from the Comptroller.

 

Impôts Duty Proposals

 

Increase the duty on alcohol, tobacco, fuel and VED by the following:

 

  • Spirits – 1.7% - an increase of 21.7p per litre
  • Wines – 1.7 % - an increase of 2.4p per 75cl bottle
  • Strong beer – 1.7% - an increase of 1p per pint
  • Weak cider – 6.9% - an increase of 1.1p per pint
  • Standard cider – 6.9% - an increase of 2.2p per pint
  • Strong cider – 8.7% - an increase of 4.6p per pint
  • Tobacco – 4.7% - an increase of 22.4p on 20 king size cigarettes
  • Fuel – 2.2% - an increase of 1p per litre
  • Vehicle emission duty bands -  a 1.7% increase

 

Stamp Duty and Land Transaction Tax Proposals (LTT)

 

First time buyers

 

To note that the temporary threshold of £450,000 for determining entitlement to reduced rates of Stamp Duty/Land Transactions Tax is not extended beyond 31 December 2014, whereupon the threshold will revert to £400,000.

 

Stamp Duty/LTT on Secured Debts

 

The Stamp Duty and Land Transactions Tax Laws are amended to reduce rates/tax on securing mortgages on Jersey residential property costing no more than £400,000.

 

Stamp Duty/LTT on Expensive Properties

 

The Stamp Duty and Land Transactions Tax Laws are amended to increase rates/tax for properties costing more than £1m.

 

Stamp Duty – Fair Rates of Duty on Devising of Immovable Property

 

The Stamp Duty Law is amended to enable fair rates of duty to apply where an application to register Probate is received from a charity but where there are individual heirs to the Estate in addition to the charity itself.

 

Capital Programme for 2015

 

The Medium Term Financial Plan (MTFP) set out the capital programme for each of the years 2013-2015 and the debate on the MTFP approved the capital programme, in total, for each of these years. The Budget for each of these years then approves the detailed list of projects.

 

The total allocation approved for 2015 was £77,341,000.

 

A review and reprioritization of the proposed programme reduced the total capital requirement to £76,382,000. The payroll software replacement, the second phases of additional primary school accommodation and sports strategy infrastructure have all been accommodated within the revised programme. The removal of the Social Housing programme due to incorporation allowed for the second phases of the Future Hospital and Liquid Waste Strategy to be accommodated.

 

More detail of individual projects can be found in the main body of this document, but, departmentally, the approximate allocations for 2014 are:

 

Chief Minister’s Department                 £2.56m

 

Education Sport and Culture                £4.58m

 

Heath and Social Services                   £28.21m

 

Transport and Technical Services       £37.91m

 

Other Capital                                       £3.13m

 

Major capital projects: Hospital, Housing and Liquid Waste.

 

The Island faces a need for major infrastructure investment in housing, hospital facilities and liquid waste infrastructure. The Budget 2014 brought forward innovative and cost effective ways of funding these projects that will minimise the cost, maximise the use of existing resources and safeguard our Island for the long term. The report confirms the proposed solution for the funding of the liquid waste infrastructure.

 

 

  1. Recommendation

It is recommended that the Minister for Treasury and Resources approve the 2015 Budget Proposition, the draft 2015 Budget Statement and the Decision Summary.

 

 

  1. Reason for Decision

The 2015 Budget proposition and draft 2015 Budget Statement are to be lodged “au Greffe” at least 8 weeks prior to debate on 22 September 2014, as required by the Public Finances (Jersey) Law 2005.

 

 

  1. Resource Implications

The proposals within the Draft 2015 Budget Statement will be implemented without any increase to current approved staffing levels.

 

The financial implications of the Budget proposals in 2015 would be an increase to States revenues of £962,000 compared to the forecast from the 2014 Budget with the impact of the income tax measures which relate to income tax year of assessment 2015 not impacting on States revenues until the financial year 2016 when the financial implications are estimated to be an increase of £2,662,000.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Proposition                                                                     

 

 

Draft Budget Statement 2015

 

 

The States are asked to decide whether they are of opinion:

 

a)     to approve, in accordance with the provisions of Article 10(3)(a) of the Public Finances (Jersey) Law 2005, the estimate of income from taxation during 2015 of £615,502,000 as set out in summary Table A of the Budget Statement, with the sum to be raised through existing taxation measures and the proposed changes to Income Tax, Goods and Services Tax, Impôts Duty and Stamp Duty for 2015 as set out in the Budget Statement.

 

b)      to approve, in accordance with the provisions of Article 10(3)(d) of the Public Finances (Jersey) Law 2005, a capital head of expenditure for each of the capital projects for States funded bodies to be started or continued in 2015 (other than States trading operations) as set out in the recommended programme of capital projects in Summary Table D totalling £76,382,000, noting that the Minister of Treasury and Resources, in accordance with the investment strategy for the Currency Fund set out in the “States Investment Strategies” (made under Part 2 of the Public Finances (Transitional Provisions)(No.2)(Jersey) Regulations 2005 and presented to the States on 11th November 2013), will make an investment of £25,494,000 from the Currency Fund to fund Phase 1 of the £75 million project to construct the new sewage treatment works, with such sum being repayable by the Transport and Technical Services Department over a period of 40 years, applying a formula of investment return determined by the Minister for Treasury and Resources after taking advice from the States investment managers.

 

c)     to refer to their Act dated 3rd June 2014 in which they approved the Waste Water Strategy (P.39/2014) and to agree, in principle, that a total capital allocation of £75 million for funding the proposed new sewage treatment works should be made and to request the Council of Ministers and the Minister for Treasury and Resources to take the necessary steps to bring forward for approval further capital allocations up to this maximum of £75 million in future Medium Term Financial Plans and Budget Statements respectively;

 

d)     to approve, in accordance with the provisions of Article 10(3)(e) of the Public Finances (Jersey) Law 2005, each of the capital projects that are scheduled to start during 2015 in the recommended programme of capital for each States trading operation, as set out in Summary Table E that require funds to be drawn from the trading funds in 2015;

 

e)     to refer to their Act dated 5th December 2013 in which they approved the Draft Budget Statement 2013 and agreed, inter alia, that the Strategic Reserve Fund could be used for the planning and creation of new hospital services in the Island, and to approve the transfer of a further sum of £22.7 million from the Strategic Reserve Fund to the Consolidated Fund in 2015 so as to provide for these purposes, in accordance with the provisions of Article 4(3) and 10(3)(f) of the Public Finances (Jersey) Law 2005;

 

f)      to refer to their Act dated 5th December 2013 in which they approved the Draft Budget Statement 2014 (P.122/2014) and, inter alia, agreed to vary the purpose of the Housing Development Fund in accordance with Article 3(3)(b) of the Public Finances (Jersey) Law 2005 to include the lending of monies to enable the further provision and development of housing in Jersey,

 

and to approve, in accordance with Article 3(3)(b) the revised rules for the operation of the Housing Development Fund as set out in Appendix C of the Budget Statement with these rules giving further instruction and guidance on the use of funds and the purpose and the operation of the Fund;


 

g)    to refer to their Act dated 5th December 2013 in which they approved the Draft Budget Statement 2014 and, in accordance with the provisions of Article 10(12) of the Public Finances (Jersey) Law 2005, to approve the following additional transfers in 2014 of –

 

(i)        up to £6,120,000 from the Housing Development Fund to the consolidated fund in accordance with the provisions of Article 10(3)(f) of the Public Finances (Jersey) Law 2005;

 

(ii)       up to £1,058,000 from the Stabilisation Fund to  the Consolidated Fund in accordance with the provisions of Article 4(3) of the Public Finances (Jersey) Law 2005.

 

h)      to approve the transfer of up to £2,000,000 from the Dwelling Houses Loan Fund to the Consolidated Fund in accordance with the provisions of Article 2(1) of the Building Loans (Jersey) Law 1950;

 

i)        to note the future operation of the Strategic Reserve Fund (“The Fund”), as set out in Appendix D of the Budget Statement and to agree that the Strategic Reserve balance of £651,216,000 as at 31st December 2012 should be defined as the capital value of the Strategic Reserve and that, for future years, the capital value be maintained in real terms by increasing the capital value in line with increases in Jersey RPI(Y);

 

j)        to refer to their Act dated 5th December 2006 in which they approved the establishment of a Stabilisation Fund and agreed that the purpose of the Fund was to make fiscal policy more countercyclical and create in the Island a more stable economic environment with low inflation, and to approve the rules for the future operation of the Stabilisation Fund as set out in Appendix E of the Budget Statement;

 

k)       to request the Minister for Treasury and Resources to request for The Jersey New Waterworks Company Limited, a public company limited by shares, incorporated in 1882 and operating under the Companies (Jersey) Law 1991, to ask the shareholders of the company to pass a special resolution for the following -

 

(i)      to alter its Memorandum of Association by special  resolution, to reduce its share capital – by removing the Fifth Preference Share, class of share capital;

 

(ii)    to repay the States of Jersey, the sole shareholder of all the Fifth Preference Shares, a fair market value for the shares (estimated at £7.4 million) during 2015 (the shareholding representing 900,000 issued and fully paid 10% cumulative fifth preference shares of £5 with a par value of £4.5 million).

 

 

 

Minister for Treasury and Resources

 

 

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