From Paul St John Turner.
THERE have for some time been strong feelings that the 20% means 20% taxation affects Middle Jersey unfairly, especially with its starting point on incomes as low as £30,000 or so for some taxpayers, and its additional effect on many struggling with high mortgage payments.
The current economic situation seems to be a case for maintaining a review of this, along with considering other steps. It calls for measures, as seem to be in hand, for helping sound businesses otherwise facing financing problems, bringing forward public works where sensible and, as always, ensuring that those on the lowest incomes remain protected.
However, as we can see from the examples of the UK, which has reduced VAT across the board, and the USA, which is putting together measures clearly aimed at boosting Middle America, there is also a need to try to offset the decline in consumer spending. This is to maintain the demand our businesses so badly need for their products and services, and thus help maintain employment, too.
Certainly Middle Jersey should be considered a valid target for any fiscal relaxation at this time. It is true that as an income tax measure, suspending (or, better, redesigning so as to mitigate the effect on middle earners more permanently) 20% means 20% may not be seen as providing an immediate economic stimulus.
But many of us plan our spending on the basis of our expected financial position ahead into the near future, so knowing there is less tax to pay next year could help now. At the same time, of course, the cash-flow cost to the States coffers of an income tax relaxation would be a little into the future too, by which time we should hopefully have the benefits of measures put in hand now.
It was encouraging, before last autumn’s elections, to hear politicians and election candidates focus on the issue of 20% means 20%, given its progressive effect on middle earners now that this taxation is phasing in. The case for doing so now still seems as strong as ever.
Old St John’s Road,