Annual Business Plan 2009 (P.113-2008) - fourth amd (P.113-2008Amd.(4)) - amd

STATES OF JERSEY

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ANNUAL BUSINESS PLAN 2009 (P.113/2008): FOURTH AMENDMENT (P.113/2008  AMD.(4)) – AMENDMENT

Lodged au Greffe on 2nd September 2008 by Senator F.E. Cohen

STATES GREFFE

ANNUAL BUSINESS PLAN 2009 (P.113/2008): FOURTH AMENDMENT (P.113/2008  Amd.(4)) – AMENDMENT

1 P A GE 3, AMENDMENT (5) TO PARAGRAPH (b) –

Delete the words ", with the approval of this expenditure, in accordance with the provisions of Article 14(9) of the Public Finances (Jersey) Law 2005, dependent upon the subsequent approval by the States of the introduction of a Vehicle Emissions Duty which will generate sufficient income to fund this expenditure".

2 P A GES 3/4, AMENDMENT (9) TO PARAGRAPH (b) –

Delete the words ", with the approval of this expenditure, in accordance with the provisions of Article  14(9) of the Public Finances (Jersey) Law 2005, dependent upon the subsequent approval by the States of the introduction of a Vehicle Emissions Duty which will generate sufficient income to fund this expenditure".

3 P A GE 4, AMENDMENT (5) TO PARAGRAPH (f) –

Delete the words "providing that a new Vehicle Emissions Duty is approved by the States in 2008 to fund this expenditure".

4 P A GE 5, AMENDMENT (8) TO PARAGRAPH (f) –

Delete the words "providing that a new Vehicle Emissions Duty is approved by the States in 2008 to fund this expenditure".

SENATOR F.E. COHEN

REPORT

Supported by the Deputy of Trinity , I am proposing that we do not introduce a new Vehicle Emission Duty. My amendment still wholeheartedly supports the implementation of the environmental initiatives proposed by the Council of Ministers but requires that these measures be initially funded through increasing cash limits in a similar manner to the other amendments to the Business Plan proposed by the Council.

The reasons for my amendment are as follows:

1. W e have only just introduced GSTand this is not an appropriate time to introduce any new taxation.
2. T h e recently introduced GSTon new motor cars will raise approximately£2 million per year whichis coincidentally a similar sum to the cost of the proposed environmental initiatives expenditure. Thus it can be considered that the GST raised on the sale of new cars could notionally fund the proposed environmental initiatives. Formalhypothecation of the GSTreceiptsonnewcars for the purposesof funding environmental initiatives remains an option iftotalGST receipts are sufficient.
3. T h e introductionof the proposed new tax, in addition to the recently introduced GST, would effectively double tax the purchase of new cars.
4. A n y well-designedenvironmentaltax must satisfy 2 criteria: the first being that it taxes a genuinely environmentally negative action; the second being that all the funds raised are applied to environmentally positive initiatives.
5. T h e purchaseof a new car is not in itself an environmentally negative action. Infact it can be argued that increasing the priceof new cars will encourage the retention ofolderless efficient motor cars.
6. T h e current proposal compounds the potentially negative environmental impact of the new tax by proposing that the tax will be discounted byupto60%on the importation ofoldersecond-hand cars. This will provide an incentive to import older less efficient motor cars likely to have a more damaging environmental impact.
7. D u ring 2007 I consulted the public on the concept of introducing anannual Vehicle Emission Duty. Respondents clearly stated that if an environmental tax were to be introduced they would prefer that itbe raised by levying a small duty onfuel.
8. T h e burning of fossil fuels constitutes the negative environmentalimpactofusing a motor vehicle and therefore if anenvironmental tax were to be introduced at a futuretime, the most logical form of taxation would be a small duty onfuel.In this way the tax paid would be directly relatedtothenegativeimpact burning hydrocarbon fuel has on the environment.
9. T h e implementationof a new hypothecated environmental tax based on a small fuel duty to fund the proposed and further environmental initiatives could be considered later in 2009 dependent on the prevailing economiccircumstances and fuel prices. Initially, fundingenvironmental benefits by raising cash limits without imposing new taxation will enable the public to practically benefit from the environmental initiatives beforeembarkingon further informed consultation.
10. T h e JEC have generously agreed to contribute a £500,000one-offgrantto start theenvironmentalfund providing this is matched bythe States. TheCouncilofMinisters' proposal is to raise £2 million tobe addedto the JEC'sgrant,making a total fund of £2.5 million for the year. Theenvironmental initiatives are highly laudable and I am fully supportive of the expenditure,however I believe they should be funded, atleast initially, by increasing cash limits.

The financial implications of this amendment are self-explanatory and, as mentioned above, involve increasing overall cash limits rather than funding this expenditure through additional tax revenues. The amendment does not change the manpower implications of the Council's amendment.