After his committee ruled out a tax on employment in the Fiscal Strategy last March, he has just unveiled proposals for a £500 charge per employee to be offset against income tax demands.
Local companies will not pay the tax because it will be exceeded by their income tax liability, but non-resident companies – except finance companies – will have to pay it.
The proposals are designed to levy some tax on non-resident companies who will escape their income tax liability entirely when the zero-ten system begins in 2009.
Senator Le Sueur will face questions about the proposed move in the States on Tuesday from Deputy Geoff Southern, who says the £500 per employee charge closely resembles the payroll tax that the Finance and Economics Committee, chaired by Senator Le Sueur, ruled out last year.
He wants to know what impact the proposals will have on economic growth and job creation in non-finance businesses in Jersey and wants reassurance that they have not been designed to suit the finance sector.
The Deputy proposed a review of such a tax as part of an alternative to the Fiscal Strategy.
‘It looks awfully like a payroll tax, it smells awfully like a payroll tax and it sounds awfully like a payroll tax,’ said Deputy Southern ‘I suspect there may be further problems caused by having a payroll tax effectively payable only by companies owned outside the Island.’ In the Fiscal Strategy, Finance and Economics said a payroll tax paid by employees was unfair because it penalised earned income over unearned income, and that a payroll tax paid by companies would ‘make Jersey less competitive and less prosperous’.
The zero-ten plans, including the £500 charge which Senator Le Sueur says could raise up to £5m, will now be reviewed by a scrutiny panel chaired by Senator Jim Perchard and made up of Senator Ben Shenton and Deputies Southern and Pat Ryan.
The plans will be submitted to the UK Treasury at the end of the month, and then sent on to the EU Code of Conduct group on business taxation.