Petition Freeze personal tax until 2021 and move all onto 'pay as you earn'.

There has been talk of moving all taxpayers onto current year / 'pay as you earn' for some time now. Use Coronavirus as a change to help taxpayers by freezing tax immediately, and also migrate all taxpayers from 2021 to current year assessments.

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Ministers responded

This response was given on 1 May 2020

The Minister is sympathetic to calls to move all taxpayers onto a current year payment basis. The Minister does not support the part of the petition calling for Government to freeze tax immediately.

Read the response in full

The Minister for Treasury and Resources is sympathetic to the calls to move all taxpayers onto a current-year payment basis (CYB). The Government Plan 2020-23 (pp. 164-5) recognised the problems with having a large number of taxpayers still paying off their previous year’s tax bill on the prior-year basis (PYB) and announced a review.

“Ministers are concerned that many taxpayers who, on a prior year payment basis, are often unaware that they have a latent tax liability that will need to be paid at some point in the future, their assumption being that their income tax is being fully settled through their ITIS deductions. In many cases, the first time the taxpayer becomes aware of their latent tax liability is when they retire, take a career break or leave the Island; ITIS deductions correspondingly stop and Revenue Jersey subsequently issues a demand for the outstanding tax.

However, to prevent the issues caused when taxpayers have to pay their latent liability, often at a time when they are experiencing a reduction in their income, this Government will consider the options for bringing all taxpayers on to a current year payment basis.”

The Minister does not support the part of the petition calling for government to “freeze tax immediately”. Many Islanders and many businesses continue to receive income and therefore should remain capable of paying their taxes. To “turn-off” all personal taxation receipts would mean no money to pay for any of the services provided by Government on a day-to-day basis, in particular during the crisis. This would include salaries of healthcare workers and other frontline staff. This would be unacceptable.

Islanders should continue to pay their taxes where they can - to help the Government to fund the support it is providing to those who have lost their incomes and to subsidise businesses to foster a speedy economic recovery.
Additionally, many islanders each year take steps to pay down their PYB liability, in particular when they are heading towards retirement. It would not be fair on them simply to waive that liability for others.

The Minister has asked Revenue Jersey to examine ways of moving people onto a current-year basis and this work will form part of the ongoing Personal Tax Review. About two-thirds of taxpayers still pay taxes on a prior-year basis (PYB). As part of this further work, careful consideration would need to be given to the “easy-payment” options that could be offered to PYB taxpayers to pay off the prior-year tax bill at some future point and over a reasonable period of time, to avoid asking them to pay two years’ tax in just one year.

The Treasury will report back to the Minister later this year, in good time to make proposals to the States Assembly, if appropriate.

The Treasury and Resources Minister

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