States Throw Out Jersey Infrastructure Levy

Thursday 14 December 15:47

The States decision to reject the Jersey Infrastructure Levy (JIL) was the right one.

The Jersey Chamber of Commerce is pleased that the island's government has seen sense and decided to reject JIL, which was another new business tax. Not only is this good news for developers and commerce it is also good news for home buyers, as the cost of JIL would have inevitably been passed onto the consumers and house prices would have risen.

JIL was openly acknowledged by the Environment Minister as a tax on landowners and a mechanism for collecting revenue for the States on the uplift in land value, if planning permission were to be granted. However, Jersey does not have capital gains tax or a capital taxations system. Therefore, arguably, the Minister was attempting to circumnavigate this law by looking to tax the next best available option. Developers.

Profit on development is very rarely known until the last few houses of a development are sold. Only then can any true indication of profit be understood. However, bank loans on a development are needed upfront in order to enable the development to go ahead. In order to ensure developers re-captured the cost of JIL, they would have had to build its cost into the sale price of every house. In short, JIL would have increased property prices.

Throughout 2017, the States have looked to introduce a stream of new taxes, which they’ve attempted to disguise as user pay, levies or charges. These are all new taxes on business. Rather than constantly chip away and erode the current tax system, the Jersey Chamber of Commerce would suggest the States always carries out full and extensive engagement with commerce before looking to introduce new tax-raising revenues, in order to understand the unintended consequences of their proposals. Or carry out a thorough review of the tax system.

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