TALK of delaying the introduction of zero-10 was last night labelled reckless and damaging. Treasury was on the offensive at a public meeting held to discuss this year’s Budget when Deputy Rhoderick Matthews put the lost revenues next year as a result of scrapping corporation tax at £100m. He called for a deferral until 2009.
Treasury minister Lyndon Trott responded robustly.
‘It would not be seen as deferral, simply a legislature not prepared to maintain its policies,’ he said. ‘I believe the mere discussion of it in the manner you are is reckless. It’s very damaging - I think people are already reacting
to it.
‘I think it’s unbecoming of a relatively senior member of the States.’
Business groups have already criticised talk of a delay.
But after the meeting Deputy Matthews pledged to plough on with his campaign, saying it had public support.
He had earlier outlined his case in front of the meeting, which attracted only about 20 people not in politics or connected to the Treasury.
In 2006, income tax on company profits brought in £108m. and the figure is estimated to reach £114m. this year.
Holding that level of increase would put it at £120m. in 2008 if the tax strategy were not implemented, although zero-10 will still pull in some £20m. in income tax from companies and banks.
Deputy Matthews did not believe delaying would be seen as a U-turn, but it would mean an extra £100m. income in 2008.
Income Tax administrator Ken Forman confirmed the figures, but had a very strong warning against delay.
‘You can’t put a price on what that would do to the long-term integrity of our financial services sector,’ he said. ‘If we don’t tick that box, they will think we’re a bunch of Charlies. They will look at us and think, ﾓthey couldn’t even get it right after five yearsﾔ.’
Earlier, from the floor, Peter Gillson said that delaying zero-10 would make the States look ‘Mickey Mouse’.
Many in the financial services industry prefer Guernsey to Jersey, he said.
Jersey will bring in its new tax package in 2009 and Mr Forman said Guernsey could score points by moving earlier. ‘I think that in the year 2008, before Jersey comes on line, we could actually get a lot of business that Jersey would like to get itself.’
There were calls for Treasury to be more stringent on duty rises on alcohol and cigarettes and concern about the incentives to encourage people to work longer.
The department also hinted at changes to income tax allowances to a more targeted system, a contrast to earlier administrations’ stance to simplify the system.
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