Treasury and Resources Minister, Deputy Susie Pinel, is proposing reforms to simplify the way two-thirds of Jersey’s taxpayers pay their taxes, as part of the Government’s Fiscal Stimulus Package announced earlier this month.
The move aims to help Islanders whose earnings may have dropped significantly this year due to COVID-19. The changes - mentioned in last year’s Government Plan - to put all taxpayers onto the Current Year Basis (CYB) for paying income tax have been accelerated due to the pandemic.
About 45,000 people are paying tax in arrears, known as Prior Year Basis (PYB). However, the issue with this method of paying tax is that if a taxpayer’s circumstances change and their income reduces, it can be difficult to pay a prior-year’s bill on a current year’s income.
Under the new measures being proposed, these taxpayers would be moved onto the Current Year Basis, meaning they would pay their tax as they earn. All tax payments made during 2020 would be moved at the end of the year to pay off their 2020 tax bill. Their 2019 tax bill would be frozen until January 2023 and a range of repayment options are being developed.
Employed people who started paying tax from 2006 are already on the Current Year Basis tax system and so there would be no change for them.
The Treasury and Resources Minister is writing to all PYB and CYB taxpayers over the next week, to provide them with information about the proposed changes.
Islanders will also have the opportunity to share their views on the tax reform proposal and the payment options in a survey being launched on 3 August. The survey will be available on the Government of Jersey website. Paper copies will also be available at Parish Halls, the Library in St Helier and Citizens' Advice.
Deputy Pinel said: “The problems associated with paying taxes on a Prior Year Basis have long been spoken about and I understand that many households have gone through a worrying time as their incomes have been impacted by the COVID-19 pandemic.
“That is why I have asked officials to accelerate the work surrounding abolishing PYB from this year onwards. This measure will bring relief to many Islanders who may have had reduced incomes for much of 2020 due to COVID-19 and are worried about the tax they owe.
“It will, in most cases, put more money in many Islanders’ pockets in the short-term, which will help to stimulate Jersey’s economy as the Island recovers from the pandemic. We also want to make sure that the payment options for the 2019 tax liability are affordable for everyone.”
Government of Jersey News Release.