Author Topic: Ideas for new Taxes?  (Read 2283 times)

Offline Lokel_Yokel

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Ideas for new Taxes?
« on: February 08, 2012, 07:26:34 PM »
Leaving aside how money is spent (wasted  >:() - the bottom line is that the money to run Jersey has to come from somewhere, and the happy days from Finance (of Jersey snaffling other people's taxes by the wheel barrow full!) are long gone and won't be coming back.

My suggestions:-

Property

Stamp Duty at 10% up to £300k, 15% up to £1 Million and 20% upwards!........for both Vendor and Purchasor!.....but, the Vendor figures reduced by 1% for every year of ownership (by an individual who is a Jersey resident and a full tax payer - so corporate ownership and those on 1.1K deals are excluded).....for the average person owning a home and not as a short term "Investment" they should get the Stamp duty paid upon purchase back (after 10 - 15 years of ownership) when they sell (property only has 1 price - adding taxes on does not increase it's value, just less into the pocket of a Vendor).

Could make developers pay a reduced rate, if property sold within a year of completion (love 'em or hate 'em! folk building properties are still needed).


Remove Quallies for folk over 55, as long as they are fully tax resident and have private health care insurance. and possibly they require work permits. The target is folk who are retired / semi retired who have a few quid to spend - in Jersey.

States to offer land to locals (Resident 18 years plus) for free! to build own house within 2 years (self or a builder / developer) and with a States backed Loan guarantee (to a commercial lender).....the quid pro quo being the owner must occupy the property and is charged a rent every year for the land - 10% of house build costs?).........upon sale of the property, the new owner pays 10% pa of the sale value (for the land).

I would also privatise the management of the social Housing stock! - the States are the only landlords who have had to demolish own property assets becaue they were unable to maintain them!

GST

Up to 10%! - but removed on food and utilities. Drop the import threshold down to £200 per transaction (per month?) and freeze for 5 years.

Social Security

No upper limit - even if the rate drops in stages for higher earners.

States Administered (with Private Sector fund managers) "Top up" Pension scheme, tax deductable (up to an annual limit) and voluntary with each person having own "pot" and can choose how their own Pension funds are invested (within certain choices).......but with either an annual fee of 1% or a one off charge when pension is paid - all paid into the Social Security Fund.

Income Tax

Keep at 20% - increase the threshold / small incomes allowance up to £20k. Company tax at 0% (the finance sector needs that - it's where Jersey's money comes from) companies trading inside Jersey to all pay a location based tax, equivalent to what they would pay in Income tax - the principle already established with Banks / Finance companies etc.

A withholding tax (or simply a charge) on property rental income, deductable from Jersey Income Tax - the idea being that non-residents pay.

Drop the tax allowance on Mortgage interest to Zero! (would need to do over time) - it is just inflationary on property prices.

A new Employee tax! (A Training levy?) that drops to zero once the employee has been resident for 5 years. The idea being to make a person already resident in Jersey cheaper than simply importing someone (at whatever level)......could use the money to fund / part fund apprenticeships and courses at Highlands college.


Any other thoughts?
« Last Edit: February 08, 2012, 07:34:11 PM by Lokel_Yokel »
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Offline Calimachon

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Re: Ideas for new Taxes?
« Reply #1 on: February 08, 2012, 11:30:39 PM »
Quote from Lokel_Yokel:

Leaving aside how money is spent (wasted  ) - the bottom line is that the money to run Jersey has to come from somewhere, and the happy days from Finance (of Jersey snaffling other people's taxes by the wheel barrow full!) are long gone and won't be coming back.

UNQUOTE


I agree with you there!  The good old days will not be coming back unless something really good happens regarding Tourism or something attracts investors in the Finance Industry here but how long does it take to put a brake on unnecessary spending by our Government.  The public were far more aware, and at an earlier stage, that spending was becoming out of hand and upon stupid things. 

Now there are some  politicians  having a knee jerk reaction and tending to be cutting back on things that oil the wheels of our community life, which mostly tend to affect the young, elderly or sick, before considering the more sensible one of putting a tax on luxuries.  If they put a tax on luxuries it is the higher earner who can afford such things and the less well-paid can do without them because he usually does without them anyway.

Property - Stamp Duty

I like your Stamp Duty idea but wonder how feasible it would be to administrate.  Would you anticipate the conveyancers doing this administration - if so would it increase the legal costs.

Property - Unnoccupied Office accommodation

I realise properties are still needed but do we need any more office?

IMO there is far too much office accommodation lying empty. I don't know if this still applies but the owners (Companies probably) of such office accommodation were only too happy to sit back and expect a more than decent appreciaton in the golden years without bothering too hard about obtaining any rental income.  They should be encouraged to convert to residential accommodation where possible or be subject to an indirect tax which could be used  for residential housing purposes. 

GST

I definitely agree that GST should not be applied to food.  Once again I think if GST has to stay then it should be applied to luxuries.  I also think the States should place a retail price check on necessities to stop prices spiraling out of control and spiking.  Fuel comes immediately to mind.  It is only the government that can do this.  It is a waste of time using guidelines they are not adhered to for long.

Social Security

We will have enough elderly people within the island already without bringing in more over 55's.  They would only suck up the limited caring resources available and hike the prices even more, even if they were paying privately.

Income Tax

I am happy to see it stay at 20%.

I agree that the Mortgage interest be reduced to zero over a number of years.

I also like the idea of making it more attractive to employ a Jersey resident but not sure if I agree totally with your method of implementation.  This might deter an employer taking on extra staff or from doing any training and it might encourage poaching.

Any Other Thoughts! Yes but not major ones.

A higher Dog Tax - the proceeds to go to the agency that cleans up and looks after the States of Jersey Common Coastal and public areas.  I know many dog owners are responsible and clean up but many I have witnessed don't. 

A Bike Tax - to go to general reserve.

I have no problem with taxation as long as the money is spent wisely.  I don't expect to have a decent infrastructure without paying for it.

Cali
« Last Edit: February 08, 2012, 11:38:09 PM by Calimachon »
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Offline danrok

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Re: Ideas for new Taxes?
« Reply #2 on: February 09, 2012, 12:24:23 AM »
I think your stamp duty rates are crazy, to say the least!

What is the reasoning for such massive rates?

I'm not sure the "good old days" ever existed.  The only reason Jersey appeared to have a fair bit of cash to spare, was because they were not spending money on projects which they should have been spending money on.  The incinerator is just one example, the old one should have been replaced a long time ago.  Schools were never upgraded, e.g. former Le Rocquier building was a temporary building, which was used for far longer than it should have been.

Now they have no choice but to replace infrastructure, because it is falling to bits, e.g. sewerage treatment.

We will never get the cash back which was wasted on senior civil servants who did nothing all day, and are now being paid large pensions - funded by today's workers.

Offline Mark Forskitt

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Re: Ideas for new Taxes?
« Reply #3 on: February 09, 2012, 01:11:37 AM »
One wag I know has suggested taxing blog and forum posts......

Offline boatyboy

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Re: Ideas for new Taxes?
« Reply #4 on: February 09, 2012, 03:12:47 AM »
Quote from member Lokel,

Leaving aside how money is spent (wasted ) - the bottom line is that the money to run Jersey has to come from somewhere,

Sorry Lokel I can't  follow your logic at all.  The first reason being unless we do the opposite ( as we do in our own personal budgets at home ) and not leave aside how money is spent, we are all heading for the sticky bankrupt hole that Greece finds itself in.

Running a small business has basic rules just like running an island. 

Some basic formula.

Employ people that have got the skills to do their job efficiently and correctly. Employ only enough for the firm ( or Jersey if you like ) to carry out work that is needed, in a professional manner.
Obviously they should be paid a good and fair rate for the work done, but this must be subject to scrutiny and extra training and flexibility in the workforce to change in a fluid and a changing work environment.

Don't go into debt, unless the purchase is an essential item upon which the business ( island ) has an urgent need, and look at all estimates and contracts to ensure value for money. Use in house knowledge before even thinking of employing consultants.

Senior managers are well qualified and using a consultant can result in a shift in responsibility ie let out for management in the case of bad decision making.

And so it goes on - mostly common sense. The labour Government in the UK put  billions of extra pounds into the NHS, and just a few years later it was in a worse state than before they had increased the budget.

Jerseys' Governments way of spending money on an island a mere five miles by nine is to spend £345,000,000 per year on wages ( including pension and S/S contributions ) With crazy amounts paid to the wrong people ( including Tug captains ) many not qualified but in well placed jobs due to time served.

Thus this practice in it self must be heartbreaking for bright managers with an old fashioned twit for a boss, which of course does nothing for efficiency and value for money when you have poor management.

Finally Lokel, not a problem just pay more taxes you say, I say we pay more than enough, with user pays, GST and income tax, and give away free land, I don't understand that either I'm afraid, what happens when Jersey is concreted over. Most people had to start in a bedsit or at mum and dads home and work their way up the ladder!

Well worth reading IMO. Please click on link below.

Part of the article.

ACHIEVING A BALANCE

Comment by Roger Bale.

The States have the legal right to raise taxation and Jersey residents have a legal obligation to pay these tax demands. But in recent years the States have turned Parkinson's Law (Expenditure rises to meet income available) on it's head, by ever increasing tax demands to cover expenditure commitments which are proposed, but not limited to income. The more money the States sector absorbs the greater the taxation required to fund it.

http://planetjersey.co.uk/forum/index.php/topic,980.msg12493.html#msg12493

BB
« Last Edit: February 09, 2012, 03:14:23 AM by boatyboy »

Offline Lokel_Yokel

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Re: Ideas for new Taxes?
« Reply #5 on: February 09, 2012, 04:35:02 PM »
Cheers for the feedback folks  :)

I agree that sorting out how the money is spent / wasted is fundamentally important (we either do it before we become Greece, or after - there is no choice to not address that side) - but bottom line is that more money will also need to be raised from within Jersey, it's just a question of how it is done.

FWIW I am (to be simplistic!) on the right when it comes to making money - but on the left when it comes to (the Govt) spending it.

In regard to the Stamp duty rates - appreciate can't be an overnight thing as even though Jersey House prices are insane a sudden drop would be bad for everyone (including for those who do not own).....but the idea is that the States (us all) benefit from Property Transactions and that short term speculation is effectively taxed with the purpose of residential Property being primarily homes, not investments (another economic stupidity imported England - a housing market based on a Pyramid scheme. with a touch of Ponzi!......all works well until enough people notice that the Emperor has no clothes). A high Stamp Duty won't be inflationary, as prices cannot rise above market value - just makes buying with a view to selling in the short term less attractive. Not claiming this alone is a magic answer. The scheme would be administered as a part of conveyancing same way as the exiting Stamp Duty is administered (certainly won't need or want! yet another Dept full of Civil Servant!).

In regard to the Free land proposal, it does sound radical (and unaffordable) but once you get over the concept it does make sense as a way to provide affordable housing. The big advantage that any Govt has is being able to act over the (very) long term and not having to be driven by short term market returns. Rather than land being sold to a developer, why not keep ownership and effectively rent it out. Upside for the States is that don't need to manage and maintain the Properties and will be enough income to adminster the scheme, if not expand the scheme by buying more land. Remeber that Jersey still owns the land. Whilst i do not want Jersey to get concreted over, once people are allowed to settle in Jersey it makes sense (for everyone) both socially and economically that people have access to affordable housing (not the same as cheap housing)......if Jersey does not want to house 500,000 people - don't let another 400,000 in!

The Free land to build a home on scheme is not a replacement for existing social housing, but simply an addition. IMO it is absolutely insane to have a situation like Le Squez where an entire housing Estate was flattened because the properties had not been maintained. Could argue that it was a low build quality - but the small part of the original development that was sold to private ownership is still there. and still worth the same as any other 60's / 70's property.....so it can be done. And Le Squez is not the only estate where States Incompetence (over decades) has required properties to be flattened.....if you are counting the pennies over decades and not simply short term then the insanity and incompetence is clear......one of the answers is Owner Occupation of properties both economically and socially.......but for that need a way around a typical working joe needing to borrow 6 or 8 time his / her income for a basic family home. Economically that is insane for both an individual and for Jersey.


And shared ownership is not the answer - that's simply a way of propping up the market at unsustainable levels.


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Offline imacrappaud

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Re: Ideas for new Taxes?
« Reply #6 on: February 09, 2012, 10:59:05 PM »
With regards to

Drop the tax allowance on Mortgage interest to Zero! (would need to do over time) - it is just inflationary on property prices.

That is already being done and has been dropping for the last couple of years so it should be Zero soon anyway. I am not sure when it becomes zero but being a mortgage owner I am fully aware it has dropped already!! :'(


Offline Lokel_Yokel

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Re: Ideas for new Taxes?
« Reply #7 on: February 09, 2012, 11:51:04 PM »
That is already being done and has been dropping for the last couple of years so it should be Zero soon anyway. I am not sure when it becomes zero but being a mortgage owner I am fully aware it has dropped already!! :'(

My recollection is that it was capped a few years back (£300k?) and a commitment (for what that is worth!) to keep to that level - certainly don't recall that the intention has been declared to abolish it.......but my memory ain't what it used to be  :(............. If I also recall correctly, the English capped the figure (at £30k?!) for 20 odd years - and then abolished it entirely (with barely a whimper).......and they still managed to have an unsustainable boom in house prices!


FWIW, I am not proposing an overnight removal of the subsidy - that would be economically barmy for the whole economy (as well as devastating on the individuals concerned, at least on those who bought in the last 5 or 10 years with max mortgages)......but long term it makes no economic sense and is simply inflationary on house prices by allowing folk to borrow more......what would an individual prefer?, an interest subsidy or less actual debt? (from House price being slightly lower when they borrowed).

What I would also like to do is for the States to support first time buyers by guaranteeing a mortgage obtained from a commercial lender - say, up to 4 times someone's salary - for an annual fee.......could even create it's own Property Fund where folks could invest in and with the monies raised used solely to fund mortgages in Jersey. No one (or simple) answer for everything, but some novel thinking and approaches would be nice to see (I am not holding my breath!).

In regard to Bicycles and Dogs! - my main concern on those would be that the amount raised may not fund the cost of collection (that's why I was happy when the annual car tax got replaced by a bump on fuel).......but if it did, I would have no problem with that in principle. I would also consider making insurance on bicycles mandatory...I would also require them to have mirrors fitted (but that's another thread!). I would also suggest looking at making microchipping cats and dogs mandatory (with the dog tax / fee attached?) - possibly wrapped in with the pets passport scheme (and the animal's origin / health / immunisations), especially if the chip could be updated without needing replacement!
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Offline danrok

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Re: Ideas for new Taxes?
« Reply #8 on: February 10, 2012, 12:45:20 AM »
The problem with state housing not being well maintained has been caused by the States of Jersey spending peanuts on maintenance, with the bulk of rents collected being spent elsewhere, e.g. on the execs. pension pots, golden hand-shakes, etc.

For all those years, they were blaming the residents for the poor state of property, which was a lie.

Not sure that putting housing under control of a private state owned company would help.  That could make corruption worse (which already exists).

They just need to spend more on general maintenance.

Offline Lokel_Yokel

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Re: Ideas for new Taxes?
« Reply #9 on: February 10, 2012, 12:55:56 AM »
The problem with state housing not being well maintained has been caused by the States of Jersey spending peanuts on maintenance, with the bulk of rents collected being spent elsewhere, e.g. on the execs. pension pots, golden hand-shakes, etc.

For all those years, they were blaming the residents for the poor state of property, which was a lie.

Not sure that putting housing under control of a private state owned company would help.  That could make corruption worse (which already exists).

They just need to spend more on general maintenance.

I agree that the state of the social housing stock is primarily down to the Housing Dept. Not to say that some tennants haven't helped - but even that is really simply a failure to manage the property / tennants. As far as I am concerned if someone is defacto destroying a property then they should be out on thier ear (after due process etc etc).


Even where the overall rents are less than market rate, IMO the Housing Dept should not only have been able to fund it's own maintanence - but also have funded at least some of teh additional housing stock that was built / needs to be built. The failure is on a collosal scale!

My idea around using a private company to manage most of the housing stock (not sell it to them!) is because the present arrangement has clearly not worked (and IMO never will) - the definition of insanity is to keep repeating the same thing that failed - and expecting a different result. If someone makes a profit from doing the job well then it does not bother me. In practice it would also work out cheaper for Jersey, even without counting the cost of having to demolish assets and rebuild them
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Offline imacrappaud

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Re: Ideas for new Taxes?
« Reply #10 on: February 10, 2012, 01:53:00 AM »
My recollection is that it was capped a few years back (£300k?) and a commitment (for what that is worth!) to keep to that level - certainly don't recall that the intention has been declared to abolish it.......but my memory ain't what it used to be  :(............. If I also recall correctly, the English capped the figure (at £30k?!) for 20 odd years - and then abolished it entirely (with barely a whimper).......and they still managed to have an unsustainable boom in house prices!

I just looked it up and I think you are correct especially according to this

http://www.gov.je/TaxesMoney/IncomeTax/Individuals/AllowancesReliefs/Pages/InterestTaxRelief.aspx

I need to look into this more because my mortgage relief has dropped a lot and I dont own/owe the bank a gaff worth £300k. I am a bit confused now because I was told my tax relief was going regardless of price and it has dropped so either the link I have shown is old and out of date or I am being fleeced, I have been on the same interest rate for 3 years and my mortgage relief has dropped over those three years.

I daren't ask the bank or they might realise my deal ran out 4 months ago!!

Offline Lokel_Yokel

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Re: Ideas for new Taxes?
« Reply #11 on: February 10, 2012, 02:06:02 AM »
I just looked it up and I think you are correct especially according to this

http://www.gov.je/TaxesMoney/IncomeTax/Individuals/AllowancesReliefs/Pages/InterestTaxRelief.aspx

I need to look into this more because my mortgage relief has dropped a lot and I dont own/owe the bank a gaff worth £300k. I am a bit confused now because I was told my tax relief was going regardless of price and it has dropped so either the link I have shown is old and out of date or I am being fleeced, I have been on the same interest rate for 3 years and my mortgage relief has dropped over those three years.

I daren't ask the bank or they might realise my deal ran out 4 months ago!!

To be honest I am surprised that my memory was right!.......I think worth checking - as the Income Tax dept do make errors, I have an appeal in at the moment for something which looks simply like a mistake......and my tax affairs are not that complicated. No Mortgage though  :)  so can't check that side.
 
But could be simply that your overall tax bill has gone up on the same / similar income due to the 20% means 20% thing? (albeit not entirely sure how that is being introduced??!).
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ole razzy

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Re: Ideas for new Taxes?
« Reply #12 on: February 10, 2012, 06:54:00 AM »
we are all heading for the sticky bankrupt hole

 :o

Any advice for virgins?


Offline Lokel_Yokel

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Re: Ideas for new Taxes?
« Reply #13 on: February 10, 2012, 06:02:59 PM »
:o

Any advice for virgins?

Well, if in Guernsey might want to learn to run faster than your Brother............ ;D
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