Chamber of Commerce – Response To Proposed Waste Tax

Wednesday 29 March 15:49

In 12 months all businesses in Jersey may have to pay yet another Tax. If, later this year, the States agree to introduce the new Waste Tax.

In 12 months all businesses in Jersey may have to pay yet another Tax. If, later this year, the States agree to introduce the new Waste Tax.

That could mean an additional overnight new Liquid Waste Tax of £40,000 or more for some organisations.

There is a very real threat that this Tax could result in the closure of businesses, especially those in the tourism and hospitality sectors. Clearly, this government proposed Tax flies in the face of the Visit Jersey aim to attract 1 million tourists by 2030.

This new Tax is of grave concern for the Chamber of Commerce.

BACKGROUND:

Last year, as part of the Medium Term Financial Plan (MTFP) States Members approved ‘in principle’ for the Department of Infrastructure (DfI) to introduce, what they described as ‘user pays charges’ for the disposal of commercial (non-household) solid and liquid waste. 

In reality, this is another Tax for all businesses.

Worryingly, during the MTFP debate, subsequent Chamber Committee meetings and stakeholder meetings with the Environment Minister and DfI Chief Officer, it has become apparent that very little research or impact assessments have been carried out regarding the negative impact this new Tax would have on businesses in the island and the business community as a whole. Nor does there appear to be any thorough consideration to how water usage will be measured, such as those not on mains water, companies that source water privately or organisations that allow staff to work from home.

DfI had initially proposed the calculation for the new Liquid Waste Tax would be based on each individual organisations water bill, at 90%. Without any consultation, that figure is now 95%. Essentially doubling water rates overnight. 

Based on these figures, two hotels in the island, whose 2016 water bills were £11,000 and £41,400, would see their water rates and new Liquid Waste Tax bill collectively double overnight to almost £22,000 and £80,000. 

For an already fragile and recovering sector of the economy, the immediate and far-reaching impact of this new Tax should not be underestimated.

  • There is a very real threat hotels will close out of season, or entirely
  • Jobs will be lost
  • Unemployment will rise
  • ITIS & Social Security contributions will be diminished
  • Local food producers will see a fall in demand, as organisations may look to import pre-washed produce

In a thinly veiled attempt to disguise this new Tax as an environmental initiative, the business community is being told by DfI, they want to help businesses understand their water usage. This message is confusing. Is Jersey’s government genuinely concerned about the environment and prioritising green initiatives? Or are they looking for an easy Tax option to raise money for capital projects?

Businesses already manage their water usage, take environmental responsibility seriously and contribute to waste disposal through parish rates. While the States may think this additional Tax can be passed on and absorbed by the consumer, this simply isn’t the case. There is a glass ceiling of charges, which consumers will pay. Businesses such as hoteliers, coffee shops and those that rely on water as a major commodity for their product or service will have to absorb this new Tax. The net result, margins will be squeezed further and businesses will close.

If government is serious about supporting the island’s business community and tourism sector, then why not scrap the GST de Minimis level. Raising money for capital projects without harming existing businesses and create a level playing field for local retailers.

By their own admission, government has no appetite to tax domestic users of liquid waste and taxing the business community would appear to be the easy option for revenue raising but what real analysis has gone into alternatives? Wouldn’t taxing everyone be the fairer option? The States were in fact offered the opportunity to review the fairness of their own tax system during the MTPF debate but rejected the opportunity. 

The negative effects of this new Tax can not be underestimated. All businesses will be impacted and there is a very real threat that hotels will close, jobs will be lost and the far-reaching consequences of introducing such a Tax will undoubtedly undermine the Visit Jersey target of attracting 1 million visitors by 2030.

This statement will be sent to all States Members and Chamber will continue to lobby government against the introduction of this new Tax.

Kristina Le Feuvre

President, Jersey Chamber of Commerce.

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