The 2013 Budget, which was approved yesterday by the States Assembly, introduces a number of measures designed to provide stability, certainty and to support the economy. This is the first time that a Budget has been approved as part of the new Medium Term Financial Planning process and coordinated as part of a wider, longer-term strategy for tax and spending.
The 2013 Budget contains no tax increases, an increase in personal income tax exemptions and increased tax relief for first-time homebuyers through the extension of the stamp duty limit to £450,000.
The Budget sets out an extensive capital growth programme to stimulate the economy, with a significant focus on the development of infrastructure.
Three amendments were approved as part of the Budget debate, namely; an adjustment to the ‘distribution rules’ designed to make tax administration simpler for businesses, a freeze on the proposed duty increase on fuel and an increase in the duty on tobacco, to partially counteract the freeze on fuel duty.
The Minister for Treasury & Resources, Senator Philip Ozouf, said “This Budget maintains existing tax levels and provides extra support to Islanders through increased personal exemptions.
“Now that the States have approved the Medium Term Financial Plan and the Budget, the hard work begins on implementing the policies and allocations set by the States.
“While I am confident about Jersey’s economic position, we must not let up on our drive to modernise and deliver efficiencies. This will continue to be my top priority in 2013, together with continuing to stimulate the economy, safeguarding jobs through investment in infrastructure, and supporting the radical new policies in Health and Housing.
“This is a Budget that supports the long-term aims outlined in the Medium Term Financial Plan, in line with the recommendations of the Fiscal Policy Panel. We are in an almost unique position to be able to achieve this level of economic stimulus without incurring debt and while maintaining our key reserves.
“This Budget provides a vital next step towards Jersey’s future economic prosperity, by providing stability, certainty and growth.”
2013 Budget Measures summarised below:-
• Increase income tax exemptions by 3% in line with inflation
• Income tax allowances retained at their current level
• Targeted anti avoidance to make sure everyone pays the tax that is due – N.B. an amendment to this measure was also approved as part of the Budget, following feedback from industry, to ensure it was operating as efficiently and fairly as possible
• Removal of income tax relief on contributions to life assurance policies for those under ’20-means-20.’
• Minor administrative changes in respect of exemptions for non-residents, benefits-in-kind for directors, the penalty regime for non-resident landlords, the additional persons allowance, the ITIS regime, and private medical insurance paid by employers
Goods and Services Tax
• Amendment of the ‘bad debt’ relief provisions
• Alignment the GST treatment on share transfers for domestic property with that for directly owned domestic property
• 10% increase on spirits and wines, equivalent to £1.04 on a bottle of spirits, and 12.5p on a bottle of wine
• 8% increase on strong beer and cider, equivalent to 3.8p on a pint
• 5% increase on weaker beer and cider, equivalent to 1.6p on a pint
• 13.2% increase on tobacco products, equivalent to 50p on a packet of 20 – N.B. amended from 10%, equivalent to 38p on a packet of 20
• A freeze on fuel duty levels – N.B. amended from the proposed amendment to increase at 2.3%, which would have been equivalent to 1p per litre. This amended the original proposal to increase duty by the equivalent of 3p per litre.
• 5% increase on all vehicle emission duty bands, which will mean an increase of between £1 and £66 depending on the level of CO2 emissions of the specific vehicle and place of registration.
In 2013 these measures would raise an extra:
• £1.4 million from alcohol duties
• £1.6 million from tobacco duties
• £50,000 from vehicle emission duties
Stamp Duty and Land Transaction Tax
• Extension of the relief for first time buyers to 31 December 2013
• Reintroduction of a cap on probate duty
• Introduction of Stamp Duty court fees for contested petty debt court hearings (for claims in excess of £3,000)
Capital Programme 2013 – 2015
The report also sets out a detailed schedule of capital projects for 2013, which can be funded from within the spending envelope set out in the Medium Term Financial plan for 2013-2015.
Category: Finance & Business