STATES Members have called for better communication from the government to Islanders about issues relating to tax and social security.
During a debate about whether old-age pensions should be exempt from tax, the Treasury Minister acknowledged criticism about the failure to offer taxpayers adequate explanations about how their rates and payments were calculated.
The “in-committee” debate – held in public, but with no formal proposition or vote – was triggered by an online petition which passed the 5,000 threshold and has now been signed by almost 5,300 people.
Deputy Barbara Ward spoke first in support of the petition, which she said would have been supported by more people if those unable to sign online had been able to do so in person.
Any issue that drew support from such a large proportion of the population – Deputy Ward estimated 6.2% of the adult population of Jersey had signed – should in future come to the States Assembly in the form of a “People’s Proposition”, with Members voting at the conclusion, she added.
Criticising the confusing way in which information about taxation was communicated to Islanders, notably the so-called “marginal rate” of 26%, Deputy Ward said the current position was not fair.
“The Jersey old-age pension is the bedrock payment for all Islanders, and it’s time we supported our old-age pensions by providing it to be tax-free, or even some part-way percentage tax free,” she said.
Treasury Minister Elaine Millar said she wished to address “the very real threat to our long-term financial stability if we were to exempt the old-age pension from tax”, estimating the cost of any switch at around £20 million.
“We have all seen the graphs showing that we are looking towards having a much greater proportion of older people than younger people in the future,” she said. “Granting further tax cuts to pensioners would have a significant and increasing impact over time, likely necessitating immediate tax rises elsewhere, with further increases required in future to cover the escalating costs of this exemption.”
Deputy Helen Miles said: “It seems to me that the communication around tax and pensions is simply not good enough.”
“We’ve seen numerous letters to the JEP and messages on social media which clearly show that there is a lack of understanding.
“Perhaps the tax department should seek some professional support about messaging and communication on this topic – every taxpayer should be able to understand why they pay the tax they do, how it is calculated, what is standard relief, what is marginal relief – I think there is a lesson here for the tax department and Social Security Department.”
Housing Minister Sam Mézec spoke in his capacity as leader of Reform Jersey, saying that there were many targeted measures which could help pensioners, including reviewing tax thresholds and the winter fuel allowance, removing GST on food and rent stabilisation
“ I think it’s time that we paid greater focus on Jersey’s pensioners, the fact that far too many of them live in relative poverty and government actions over successive years have sought to make that worse. Let’s turn that around.”
Deputy Millar admitted that better communication was required.
“We have tried to explain it in a way that people understand, and have clearly got it wrong,” she said. “So we will go back to the drawing board and try to make it clearer how it works.
“It is undeniably complicated, but I can only come back to the same thing again: nobody pays more than 20% of their total income in tax.”
