States Meeting Transcript - 10/12/2010

STATES OF JERSEY OFFICIAL REPORT

FRIDAY, 10th DECEMBER 2010

PUBLIC BUSINESS - resumption................................................................6

1. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010) – second amendment (P.157/2010 Amd.(2)) - resumption.................6

1. Senator T.A. Le Sueur:..................................................................6

1. Deputy T.M. Pitman of St. Helier:.......................................................6
2. Deputy C.F. Labey of Grouville :.........................................................7
3. Deputy E.J. Noel of St. Lawrence:.......................................................8
4. Deputy G.P. Southern of St. Helier:......................................................9
5. Deputy F.J. Hill of St. Martin : ..........................................................11
6. Deputy I.J. Gorst of St. Clement:.......................................................11
7. Deputy M.R. Higgins of St. Helier:.....................................................11

8. Senator S.C. Ferguson:.................................................................12
9. Deputy D.J.A. Wimberley of St. Mary:.................................................12
10. Senator F. du H. Le Gresley:........................................................14

2. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): fifth amendment (P.157/2010 Amd.(5))..................................16

1. Senator A. Breckon: ....................................................................17
2. Senator P.F.C. Ozouf :..................................................................19
3. Senator B.I. Le Marquand:..............................................................20

4. Connétable M.K. Jackson of St. Brelade:...............................................21
5. Deputy P.V.F. Le Claire: ...............................................................21
6. Deputy G.P. Southern :..................................................................21
7. Senator A. Breckon: ....................................................................22

2. Urgent Oral Question - Deputy G.P. Southern of St. Helier of the Chief Minister regarding Zero/Ten and the Island's compliance with the EU Code of Conduct on Business Taxation: ......................................................................23

2.1 Deputy G.P. Southern :..................................................................23 Senator T.A. Le Sueur (The Chief Minister):.................................................23

1. Deputy G.P. Southern :..................................................................24
2. Deputy G.P. Southern :..................................................................24
3. Deputy M.R.Higgins:..................................................................24
4. Senator P.F. Routier: ...................................................................24
5. Deputy P.J. Rondel of St. John : ........................................................24
6. The Deputy of St. Mary:................................................................24
7. The Deputy of St. Mary:................................................................25
8. Senator S.C. Ferguson:.................................................................25
9. Deputy P.V.F. Le Claire: ...............................................................25
10. Senator J.L. Perchard: ...............................................................26

11. Deputy M. Tadier :...................................................................26
12. Senator T.J. Le Main:................................................................26
13. Deputy R.G. Le Hérissier of St. Saviour:............................................26
14. Deputy A.E. Jeune of St. Brelade:...................................................27
15. Deputy T.M.Pitman:................................................................27
16. Senator B.E. Shenton: ...............................................................27
17. Deputy G.P. Southern : ..............................................................28

PUBLIC BUSINESS - resumption..............................................................28

3. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): seventh amendment (P.157/2010 Amd.(7))..............................28

1. The Deputy of Grouville :...............................................................28 Senator P.F.C. Ozouf :........................................................................31 The Deputy of Grouville :.....................................................................31 Deputy G.P. Southern :........................................................................31

2. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): seventh amendment (P.157/2010 Amd.(7) - amendment (P.157/2010 Amd.(7)Amd.)............................................................................32

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):......................32
2. The Deputy of Grouville :...............................................................33
3. Deputy R.G. Le Hérissier: ..............................................................34
4. Deputy M. Tadier :......................................................................34
5. Deputy J.A. Martin of St. Helier:.......................................................35
6. Deputy J.M. Maçon of St. Saviour:.....................................................36
7. Senator T.J. Le Main: ..................................................................36
8. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................36 Deputy M. Tadier : ............................................................................37
9. Senator P.F. Routier: ...................................................................38 Mr. H. Sharp Q.C., H.M. Solicitor General:..................................................38 Deputy J.A.N. Le Fondré:....................................................................39 Deputy M.R.Higgins:........................................................................39 Deputy I.J. Gorst : ............................................................................40 Deputy M. Tadier : ............................................................................40 Deputy P.V.F. Le Claire: .....................................................................40 Senator P.F. Routier:..........................................................................41
10. Deputy A.E. Jeune : ..................................................................42
11. Deputy P.V.F. Le Claire:............................................................42
12. Senator J.L. Perchard: ...............................................................43
13. Deputy M.R.Higgins:...............................................................44
14. The Deputy of St. Mary:.............................................................45

LUNCHEON ADJOURNMENT PROPOSED..................................................47

LUNCHEON ADJOURNMENT................................................................47

15. Senator T.A. Le Sueur:..............................................................47
16. Deputy K.C. Lewis of St. Saviour:..................................................48
17. The Connétable of St. Brelade:......................................................48
18. Deputy G.P. Southern : ..............................................................48
19. Senator P.F.C. Ozouf : ...............................................................50

3. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): seventh amendment (P.157/2010 Amd.(7)) - as amended................51

3.3.1 The Deputy of Grouville :...............................................................52

4. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157.2010) - as amended...............................................................53

1. Senator P.F. Routier: ...................................................................53
2. Deputy T.A. Vallois of St. Saviour:....................................................54
3. Senator A. Breckon: ....................................................................54
4. The Deputy of St. Mary:................................................................55
5. Senator J.L. Perchard:..................................................................56
6. Deputy R.G. Le Hérissier: ..............................................................57

7. Senator F. du H. Le Gresley:............................................................58
8. Connétable D.W. Mezbourian of St. Lawrence:........................................59
9. Deputy M.R.Higgins:..................................................................59
10. Deputy P.V.F. Le Claire:............................................................60
11. Senator F.E. Cohen: .................................................................61
12. The Deputy of St. John:..............................................................61
13. Deputy G.P. Southern : ..............................................................62
14. Deputy A.E. Jeune : ..................................................................63
15. Senator P.F.C. Ozouf : ...............................................................63

4. Draft Finance (2011 Budget) (Jersey) Law 201- (P.158/2010)..........................68

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):......................68

1. Deputy M. Tadier :......................................................................68
2. Senator A. Breckon: ....................................................................69
3. Deputy G.P. Southern :..................................................................70
4. The Deputy of St. Mary:................................................................70
5. Senator J.L. Perchard:..................................................................70
6. Senator T.J. Le Main: ..................................................................71
7. Deputy T.M.Pitman:...................................................................71
8. Senator P.F.C. Ozouf :..................................................................71

2. Senator P.F.C. Ozouf :..................................................................72

1. Deputy T.A. Vallois: ...................................................................73
2. Connétable A.S. Crowcroft of St. Helier:...............................................73
3. The Deputy of St. John:................................................................73
4. Deputy G.P. Southern :..................................................................74
5. Deputy M. Tadier :......................................................................74
6. Deputy M.R.Higgins:..................................................................74
7. Deputy A.E. Pryke of Trinity :..........................................................74
8. The Deputy of St. Mary:................................................................75
9. Senator A. Breckon: ....................................................................75
10. Senator P.F.C. Ozouf : ...............................................................75

3. Senator P.F.C. Ozouf :..................................................................82

5. Draft Income Tax (Amendment No. 37) (Jersey) Law 201- (P.159/2010)..............83

1. Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........83

1. Deputy P.V.F. Le Claire: ...............................................................83
2. Deputy A.K.F. Green of St. Helier:.....................................................83
3. Senator P.F.C. Ozouf :..................................................................83
4. Deputy G.P. Southern :..................................................................84
5. Deputy E.J. Noel: ......................................................................84

2. Draft Income Tax (Amendment No. 37) (Jersey) Law 201- (P.159/2010): amendment (P.159/2010 Amd.).......................................................................84

5.2.1 Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........84

3. Deputy E.J. Noel: ......................................................................85

6. Draft Goods and Services Tax (Amendment No. 3) (Jersey) Law 201- (P.160/2010)..85

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):......................85
2. Senator P.F.C. Ozouf :..................................................................86

7. Draft Goods and Services Tax (Miscellaneous Amendments) (Jersey) Regulations 201- (P.161/2010)..............................................................................87

1. Senator P.F.C. Ozouf (The Minister for Treasury and Resources):......................87
2. Senator P.F.C. Ozouf :..................................................................87

1. Deputy M.R.Higgins:..................................................................87
2. Deputy A.T. Dupré of St. Clement:.....................................................87

3. Senator P.F.C. Ozouf :..................................................................87

8. Draft Income Tax (Amendment No. 36) (Jersey) Law 201- (P.121/2010)..............89

1. Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........89
2. Deputy E.J. Noel: ......................................................................90

1. Senator F. du H. Le Gresley:............................................................90
2. Deputy E.J. Noel: ......................................................................90
   3. Deputy E.J. Noel: ......................................................................90

1. Senator A. Breckon: ....................................................................91
2. Senator P.F. Routier: ...................................................................91
3. The Deputy of St. John:................................................................91
4. Deputy E.J. Noel: ......................................................................91 Senator P.F.C. Ozouf :........................................................................93

9. Draft Magistrate's Court (Miscellaneous Provisions) (Amendment No. 10) (Jersey) Law 201- (P.155/2010)...................................................................93

1. Senator T.A. Le Sueur (The Chief Minister):...........................................93

1. Senator B.E. Shenton:..................................................................93
2. Deputy P.V.F. Le Claire: ...............................................................93
3. The Deputy of St. John:................................................................94
4. Senator B.I. Le Marquand:..............................................................94
5. Senator T.A. Le Sueur:.................................................................94

Senator S.C. Ferguson (Chairman, Corporate Services Scrutiny Panel):......................94

2. Senator T.A. Le Sueur:.................................................................95
3. Senator T.A. Le Sueur:.................................................................95

1. The Deputy of St. John:................................................................95
2. Senator T.A. Le Sueur:.................................................................95

10. Draft Social Security (Amendment No. 19) (Jersey) Law 201- (P.163/2010)..........95

1. Deputy I.J. Gorst (The Minister for Social Security):...................................95

1. Senator A. Breckon:.................................................................96
2. The Deputy of St. John:..............................................................96
3. Deputy G.P. Southern : ..............................................................97
4. Deputy P.V.F. Le Claire:............................................................98
5. Deputy M.R.Higgins:...............................................................98
6. Deputy I.J. Gorst :....................................................................98

2. Deputy I.J. Gorst : .....................................................................101

1. Senator A. Breckon:................................................................101
2. Deputy I.J. Gorst :..................................................................101
   3. Deputy I.J. Gorst : .....................................................................102

1. The Deputy of St. John:............................................................102
2. Deputy R.G. Le Hérissier:..........................................................102
3. Deputy P.V.F. Le Claire:...........................................................102
4. Deputy I.J. Gorst :..................................................................103

11. Draft Community Provisions (Mortality in Oysters) (Amendment) (Jersey) Regulations 201- (P.165/2010)..........................................................104

11.1 Deputy R.C. Duhamel of St. Saviour (Assistant Minister for Planning and Education - rapporteur):............................................................................104

12. Draft Sex Offenders (Jersey) Law 2010 (Appointed Day) Act 201- (P.175/2010)....106

12.1 Senator B.I. Le Marquand (The Minister for Home Affairs): ..........................106

1. Senator B.E. Shenton: ..............................................................108
2. The Connétable of St. Ouen : .......................................................108
3. The Deputy of St. Mary:............................................................108
4. The Deputy of St. Martin : ..........................................................109
5. Deputy K.C. Lewis : ................................................................109
6. Deputy G.P. Southern : .............................................................109
7. Senator P.F.C. Ozouf : ..............................................................109
8. Deputy A.E. Jeune : ................................................................110
9. The Deputy of Trinity : .............................................................110
10. Deputy M. Tadier : ................................................................110
11. Deputy J.B. Fox of St. Helier:....................................................110
12. Senator B.I. Le Marquand:........................................................110

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ..................112

13. The Connétable of St. Mary (Chairman, Privileges and Procedures Committee):......112

1. The Connétable of St. Helier:..........................................................113
2. Deputy P.V.F. Le Claire: ..............................................................113
3. Deputy M. Tadier :....................................................................113

CHRISTMAS GREETINGS...................................................................114 Senator T.A. Le Sueur (The Chief Minister):................................................114 The Connétable of St. Ouen:................................................................114 Deputy R.C. Duhamel:......................................................................115

ADJOURNMENT..............................................................................116

[09:31]

The Roll was called and the Dean led the Assembly in Prayer.

PUBLIC BUSINESS - resumption

The Deputy Bailiff :

We now resume debate on the amendment of Senator Le Gresley and I call on the Chief Minister to speak.

1. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010) – second amendment (P.157/2010 Amd.(2)) - resumption

1. Senator T.A. Le Sueur :

The problem with this amendment is that, unlike G.S.T. (Goods and Services Tax) on some sorts of necessities, these fees are optional and I.S.E. (International Service Entity) providers will only opt for these fees or additional fees if it is in their interests to do so. They have a choice: they can opt in or they can opt out and charge G.S.T. One might think that they would do that and they would work out how much G.S.T. they would have to pay, how much annual fee they would have to pay and choose the cheaper option, simply on grounds of cost. Unfortunately, it is not as simple as that and the choice will often not be made simply on cost grounds but on some of the other side effects that there are in having to apply G.S.T. in the normal way: administration costs and compliance costs and these sorts of issues. What we have here, we can remind ourselves that of the income we get from International Service Entities the majority of it comes from the individual clients of those service providers, not from the service providers themselves, and we are already proposing an increase in the basic I.S.E. fee, an increase which the Senator proposes to increase still further. But that work always has to be done with a degree of care, one often speaks about taxation being like the plucking of a goose: you have to do it feather by feather, and the danger with this is that we are going to do rather too much at one go. It is important that when one does make changes like this to a tax where International Service Entities can opt in or opt out that we consult with them, and that is the intention of the Minister for Treasury and Resources in having that consultation, just as we have had the consultation already in proposing to increase the I.S.E. fee from £100 to £200 per entity. But we have had no consultation on a potential doubling of the fees by the service providers and, in my view, I contend that before having that increase - which may or may not be desirable - that consultation, that discussion with the providers is essential and in the absence of such discussions these amendments should be put on the side for the time being and not proceeded with. On that basis, I would urge Members to oppose parts 2 and 3 of this amendment.

Senator B.E. Shenton:

Sir, could I rather belatedly declare an interest because I will be affected by this and we are talking as a debate.

The Deputy Bailiff :

Noted. Deputy Trevor Pitman.

1. Deputy T.M. Pitman of St. Helier :

Sorry, I thought there was someone before me, Sir. Thank you. That was an interesting turn of phrase that the Chief Minister used: "You need a degree of care with tax: it is like " what did he say: "Plucking a goose"? It could have been a slip of the tongue but I thought he said about: "Plucking the peasants" because that is what we are doing. I have to say, the proposer of this amendment, I knew him to a degree before he became elected, his politics are not that much different from my own but, my word, he must be really finding it a real eye-opener in these 5 months; he has entered the twilight zone of the parallel universe of the States Chamber. We had the adjournment yesterday and I was quite pleased because I really thought the Minister for Economic Development was going to get out his violin. Once again, having agreed to tax the ordinary

working people 5 per cent I do not know if anyone saw the news but the O.A.P.'s (Old Age Pensioner) party there and what it will mean to them, but we are going to tax them. Yet again, here we were, the same old spin, the same old spiel of the Minister for Economic Development, as is the Council of Ministers' way, telling us it would be Armageddon if we raised this by a few pounds, really. Yes, everyone would up sticks and leave, no evidence, and I challenge the Minister for Treasury and Resources for him to come up with some evidence but, as usual, they do not have any. It is just one rule for some and: "Let us hit the sitting ducks, let us hit the easy targets" as we do, again and again. How do we justify this continued hammering of some and this kid's-glove treatment of others? I have to applaud, I think it was the BBC the Minister for Treasury and Resources has been accused of being a scrooge, well, if I was a 1(1)(k) with an income of £3 million a year, I would call him Santa Claus: 4 per cent tax, nice hey? Yes, we are going to take £5 out of every £100. How does this House, or some of this House and I am pleased that on the radio today they stressed it was the majority only of the Government who voted to hammer the ordinary people yet again by protecting those who were big enough and rich enough to squeal that they will run away if they have to pay their dues. We had a good-humoured debate, as I think it was Deputy Le Fondré who said, yet we come to this amendment and I am sorry but good humour cannot divert from telling the truth. I had 17 contacts last night, which is not a lot, but people do not contact you after most debates. As one lady - Mary from St. Brelade - said: "Do not be downhearted, that vote with just 2 difference shows that we need just a handful more of States Members who live in the real world instead of all of these third-rate businessmen who come from privileged backgrounds." That, I am afraid, goes to the real core of what we hear again and again when it comes to big business, when it comes to finance; when it comes to the ultra rich being asked to take their medicine like the rest. Senator Le Gresley is a reasonable man, what he is proposing is moderate, it is the personification of the word, and yet again we are reeling out the same old spiel about why it must not be done. "We must consult", well, we did not consult before we considered bumping it up to 6 per cent yesterday, did we? I have never met one member of the public who was consulted on that. "This figure would remain in the ballpark of our competitors" so what is the problem? I was told yesterday by a Senator: "Yes, Trevor, but you are not understanding how the world works." Well, I am sorry, but it is not the way my world works and, if you look around the world, the world is changing and this world is dying. I had an exchange with a member of the public a couple of months ago and I was really pleased as he was bandying about quotes to use a very badly - written in English - one to be fair from Mexico: "The definition of a free-market fundamentalist: a man who will understand nothing until there is nothing left to understand" because all it is about for them is exploit, exploit, exploit; take, take, take, big stick. Is it not funny that just on the American news yesterday there was a programme about the Leona Helmsley, the "Queen of Mean" for those of you who do not know. The infamous saying: "Tax is for the little people, we do not pay tax" and that is the way some of this Government is going; I am not part of that Government and I just cannot wait for the elections to come because this hypocrisy, these double standards are going to come home to roost at last and I applaud Senator Le Gresley for bringing it and I say to him: "Hang in there, stick to your guns, do not be bullied, do not be sucked

into the group-think of the Tories, who are leading us to the abyss." [09:45]

The Bailiff :

I call upon the Deputy of Grouville .

2. Deputy C.F. Labey of Grouville :

I would like to think I am one of the free speakers and thinkers in this House and I applaud Senator Le Gresley for bringing these 2 propositions forward, and I can understand why he has done it. I understand the sentiment behind it because there is a school of thought that believes that the finance industry is not necessarily paying its way in these difficult times. However, I am afraid I cannot support either amendment. Having worked in the finance industry, I do know a bit about it and I am afraid the timescale that he is proposing here, to be implemented by 1st January 2011, is just totally unrealistic. Most people will realise that annual fees for companies will have gone out in November for the next year and this is just too much. I would say to people who run departments, Ministers who are in charge of departments who say: "It has not been consulted upon", but I would say to them, well, it is for them with their army of officers to consult on these issues, not for the Back-Bencher who is doing their best bringing something forward. But if he had changed the date to 2012 I would say it may be realistic but, unfortunately in its present form, I cannot support either amendment.

3. Deputy E.J. Noel of St. Lawrence :

Just an aside at the beginning, Deputy Trevor Pitman's catchphrase appears to be: "Tax is for the little people" well, he is right, I am a taxpayer and I am a little person. [Laughter] There appears to be some confusion yesterday and Deputy Trevor Pitman still appears to be a bit confused. No, Deputy Pitman, this will not result in Armageddon, it will simply mean that we collect less money from the finance industry. Both part 2 and part 3 of Senator Le Gresley's amendment are well- meaning but they will not achieve what he is trying to achieve. It is correct that if we put up the fees as suggested in part 2, we will receive less income from the finance sector and I would like to explain this to Members. Currently, we get from banks and trust companies and similar financial institutions an I.S.E. in the respective banks of £30,000 per annum and in respect of trust companies, £7,500 per annum. But in addition to that, as the Chief Minister explained, we get a further £100 for every single one of their client companies and this amounts to some 67 per cent of the total I.S.E. fees received each year, that is some £3.1 million just from the individual client companies. If we increase the bank and trust company I.S.E. fees, as suggested, they may simply switch to paying G.S.T if it is less cost to them in terms of administration and in terms of the G.S.T. paid, and that is a not a bad thing; that is their choice. But an unintended consequence of that is that we will lose all those lots of £100, which is some £3.1 million per annum. In adopting part 2, we will end up with less income which I am sure is not what the good Senator is trying to achieve. Last year the Minister for Treasury and Resources was asked in an amendment brought by I believe Senator Breckon, to increase the fees and we explained at that time, as the Deputy of Grouville has just explained, that it is practically not possible. When I used to run trust companies, we raised our fees in October, we processed them, the bookkeeping was done, the client ledgers were updated, those fees were sent out to our clients at the beginning of November and we collected the money at the beginning of December. It has been a long week but I believe it is 10th December today; in my last trust company that I worked in, we would have collected something like 70 per cent of our fees for the next year by this time. Much of what I was going to say has already been said by the Deputy of Grouville and by the Chief Minister. If we accept Senator Le Gresley's part 2, we will end up with less income and I am sure that is not what Members want so I strongly suggest that we reject part 2. Really, it is a matter for Members whether or not to accept or reject part 3 but from my mind it is too late. Last year, the Minister for Treasury and Resources was asked and gave an undertaking to look at I.S.E. fees and to include provisions in this year's Budget and that is exactly what he has done, he has doubled the minimum fee from £100 to £200. At this stage, I think we

can do no more.

Deputy M. Tadier of St. Brelade :

Sir, can I ask for clarification? It seems to me that there would obviously be a gain in one respect because of the increase in the I.S.E. fees if they were to double. Potentially, if there were none of the companies left, there would a complete doubling of those fees, so what is the threshold, what is the optimum point at which one starts to lose money and what research has been done for that, because that would be really useful to know? Because it seems that if fewer companies than anticipated opted out, then we would be winning but obviously if more opted out through doubling the fees then we would be losing, and it is really important that we have that kind of information from the Assistant Minister, because at the moment it seems to me

The Deputy Bailiff :

This is a question, not a statement.

Deputy M. Tadier :

Yes, that is the question.

Deputy E.J. Noel:

I am happy to answer that. It will vary from case to case because it depends on the amount of inward consumption that an individual bank or trust company would spend in G.S.T. so it varies from case to case. But for example, to give you an idea now, some 40 per cent of banks already pay G.S.T. and are not covered under the I.S.E. scheme because it is cheaper for them to do so, that is 40 per cent already. Some 20 per cent of trust companies already are under the G.S.T. scheme not the I.S.E. scheme because it is more cost effective for them, so we can only assume that that would go up and therefore we would get less revenue.

Deputy M. Tadier :

Sir, could I ask for a point of clarification while the Assistant Minister for Treasury and Resources is around? He says that if we go from £100 to £200 as the Minister for Treasury of Resources is suggesting, it is not too late to do that but it is too late to add another £25, I do not understand this. Could you explain?

Deputy E.J. Noel:

It is quite simple: the Budget was lodged some 6 to 8 weeks ago and trust companies and banks know what was in that Budget and they have raised fees accordingly.

The Deputy Bailiff :

I call on Deputy Southern .

4. Deputy G.P. Southern of St. Helier : I was not aware I had pressed the light.

The Deputy Bailiff :

Do not speak if you do not wish to.

Deputy G.P. Southern :

I certainly will. I do wish to speak because I am simply amazed by the logic again, or the apparent lack of logic, in what has been stated. We must not raise these fees by an additional £25 because we will lose revenue, because some companies will opt out of the alternative to paying G.S.T. and stay in the system that we have and pay G.S.T. thereby contributing to revenues of the States. Either they are going to pay a fee not to pay G.S.T, in which case we get money, or they are going to pay G.S.T. and they could make their minds up which one they are going to do but, either way, money comes into our pot, it is quite simple. We were warned yesterday, we got a variant on: "They will all leave" which was: "No more will come because we are charging them too much." Hang on, wait a minute, we know we are in a competitive market and the Isle of Man has gone down to 10 per cent, the Island is clinging on to 12.5 per cent as its headline rate, Guernsey is well, we will talk about Guernsey in a minute, perhaps. Our competitors, those 2 competitors, are sitting in there with a headline rate that is low to attract companies to their shores and when they are there they recognise that they pay any number of fees: a fee for this and a fee for that, for example, their social security fees are much larger than ours so they lose out on that. It is a competitive market but everybody is going with the headline rate and then putting some charges

underneath there, whether they are registration or this or that, that is the way they are generating some money from these companies. That is exactly what were are doing here: we have got a headline rate of 10 per cent tax on finance sectors but we have G.S.T. and we have got this get-out clause, this: "You have got to contribute something to the Exchequer, to the Revenue, and you can either do it by paying G.S.T. on those services that you have used locally or not, you can opt out and pay us some money to opt out." Not a problem, but we are in a competitive market. I am hearing words that a lot of business at the moment is going towards Guernsey. I think: "Why is that?" is that because their fees to register and be exempt from whatever are high or low, is that why people are moving? Are people moving for £25? Are companies moving for £200? Does that make a difference to where somebody goes? No, I do not think so. But what advantage does Guernsey have at the moment: Why? It has decided that it is not going to pursue Zero/Ten and therefore, people are saying: "Oh, the E.U. (European Union) are no longer gunning for them, that is the safest place to be." If I was to choose between Isle of Man, Jersey and Guernsey, I would be going where the pressure is off because the pressure is certainly on us and it is certainly on the Isle of Man in terms of compliance with the E.U. Code of Business taxation and our Zero/Ten and the Isle of Man's Zero/Ten is number 1 target in the view of the E.U. If business is at the moment going to Guernsey then that is perhaps it, it is not about competition over piddly little fees. Then we have heard the other reserve that is trotted out. I have been here 8 years and I have heard it time and time again, which is: "No, we cannot touch businesses without consultation." What consultation have shopkeepers out there got over duty rises? We cannot possibly do anything almost overnight by 1st January, what would shops be doing on 1st January or 1st June, whatever, they will be putting their prices up. It is a single letter: "The Government has raised our charges, we are passing them on." It does not take long to write and send out and those companies that have pre-judged the Budget, let them learn the lesson, if they have sent their fees out already, that this

House and not the Minister for Treasury and Resources decides what we put in the Budget and this House can amend the Budget and if there is an extra £25 on this particular fee then so be it. That is the way government works and if businesses have pre-empted that and pre-judged it, well, more fool them pause: "Send out your bills in January when you know where you are" that is common sense. But: "Oh, no, we cannot do that and we cannot act and we must consult and take our time over it and we cannot possibly raise the fees by this much because we are not competitive." Of course we are competitive still, so let us take a long hard look at this and we are getting the sold old tired arguments trotted out time after time: "We must not touch the finance sector in any way whatsoever." Let us put the context on it: under Zero/Ten we halved the tax that we were getting from the banks and the finance sector. Are we fools? Do we just give that up, do we just say: "Well, that is it, lucky old banks. Our revenue is depleted." Come on, we have got to look around for charges, everybody in the world is doing it, this is a sensible move that can be done, let us please vote for this.

[10:00]

Senator J.L. Perchard:

Sir, can I ask for a point of clarification from the previous speaker? He may like to confirm something that he has said. He said, when talking of Guernsey: "They have decided that they will not be pursuing Zero/Ten." Does he stand by this statement and will he share any written evidence he has to support it?

Deputy G.P. Southern :

Right, here we go. The statement would be: "Although Guernsey operates a Zero/Ten corporate tax regime similar to those operated by Jersey and the Isle of Man, its regime is not being assessed as Guernsey was deemed by the group [the ECOFIN Group] to have made strong enough public commitments to move away from the current regime." That is what I am saying and that is why it is a fact.

Senator J.L. Perchard:

I am afraid, Sir, the Deputy is misleading the Assembly.

The Deputy Bailiff :

If you wish to speak, in due course you will be able to, Senator. I call on the Deputy of St. Martin .

5. Deputy F.J. Hill of St. Martin :

I do not have a problem in making sure that we will play it their way, but really, we are going to make heavy weather of this if we do not look at what the proposition is. The Deputy of Grouville has made it quite clear, and I support what the Deputy of Grouville is saying. The question was: "Do we think it is fair to impose these charges as from 1st January 2011?" If you do, okay, vote for it, if not, I would ask we take the vote. I certainly cannot support it. I might support the raising of fees in 2012 but not 2011 and I would ask that Senator Le Gresley looks seriously at this proposition and ask that he withdraw it and come back with another one for 2012; he may well get my support and he may well get a lot more people's support, but not for 2011.

6. Deputy I.J. Gorst of St. Clement :

Sorry, I am a bit late to rise now having just heard that speech, however, I felt I ought to rise after Deputy Southern 's comments there. I think the only thing missing from his normal speech that he would have made on these occasions was either starting or finishing with the terms: "I support finance" and then going on to do anything but that. I was also somewhat surprised to hear him outline the sentiment that in his opinion we should tax them before they go and I find that extremely frustrating and not constructive at all and not understanding the world in which we, as States Members, must operate. I think he also used the phrase: "We will show them." That, I do not think is a responsible attitude for any legislator to hold when it comes to understanding [Approbation] any of the industries that make this Island the success that it is. I think if I could just move very quickly and briefly back to a number of points that have been raised and that is an understanding that there are finance companies out there who choose to pay the I.S.E. fee rather than going through the whole of the G.S.T. administration. There does become this tipping point where they are prepared to pay a higher fee than they would have to in G.S.T. because of the perceived benefits to their clients of not having to have added administration, and there is a cost associated with that, and they will consider perhaps paying a higher fee than the administration would be. Once they get out of balance with what that extra administration would be then they take the decision that they will fall into the G.S.T. regime and that, quite simply, seems to me something that Members are not necessarily understanding. However, the main point is that this is, in my opinion, not achievable for 2011, as the Deputy of Grouville and the Deputy of St. Martin so ably said.

7. Deputy M.R. Higgins of St. Helier :

I shall be supporting this amendment and I will give 2 reasons why: for a number of years I worked 12 years at the Financial Services Commission and during that time I spent a number of times working in the Registry as the I cannot remember the title now, maybe it was Assistant Registry Manager or whatever it was, but I was vetting some of the companies that were coming through into the Island and also special purpose vehicles and various other types of companies that were coming through the Companies Registry. I can tell you the one thing that really struck me was that our fees are not that bad, to be perfectly honest, and they could go up. Secondly, was the level of fees that are being charged by the industry. How many of you read the Daily Telegraph 2 or 3 days ago? To give you an idea of some of the fees that are being charged, not just in Jersey, we are talking about the U.K. (United Kingdom). But in terms of pensions, they have estimated that because of hidden charges, hidden fees from the people who are providing investment management and so on, that basically half your pension that you have saved up for your life will go to the investment managers and the others. What I will tell you is I know from many a time when we were challenging different companies and we were looking at what they were proposing, it did not seem to meet with the regulations, and you question them, they were going back to their clients and we knew they were charging their clients a lot more money, but their clients were prepared to pay it, they wanted funds here. I think that some of the arguments that are coming from some Members of this House are from accountants who work for many of those firms or have worked for those firms, they know what their fee structures are like, they are making a lot of profits from it, despite what they say, and a lot of those charges are hidden charges and so on. If they took a hit on their margins a little bit and offered a better product, they may get more business. For example, Deputy Noel was talking about he was not sure of the amount of fall-off; in economics it is called price elasticity of demand: you measure what the effect would be of putting the price up a certain level to see what the fall-off in demand is. I do not think they have done any analysis on either this or anything else, even on G.S.T. or even some of the products that we have been looking at, on import duty. I do not think they have even done the figures so the point is there is a lot of rubbish talked in this House at various times okay, some people on the other side of the House will say it is coming from here, we think it is coming from over there. There is so much disinformation as well, but let me just say I do not believe this will impose too great a burden and I do believe we should do it. I think if Jersey really wants to get ahead in finance we should look at more ethical charging, for example, we could do an awful lot better, we could build up a proper investment management thing on pensions in this Island if we got rid of those hidden charges that the Daily Telegraph was talking about and marketed that abroad and I think we would get a phenomenal amount of business. I shall be supporting this amendment.

8. Senator S.C. Ferguson:

Just a quick one. I too worked in the Registry, vetting companies. The Deputy talks about the high level of fees. Surely there is a rule in economics that the labourer is worth of his hire? It is just 3 years to do an economics degree, an accountant is more like 5 years, a good investment manager is 5 or 6 years and for him to be quite so dismissive is really a bit pathetic. He is straying into the realms of marketing and I am not sure that an economics degree qualifies you for the science of marketing.

9. Deputy D.J.A. Wimberley of St. Mary :

That was a nice lead-in to some of what I am going to say, the science of marketing, but I want to make a couple of points first. I think the really important issue that has been highlighted is this business of it being too late which the Deputy of Grouville referred to and I am struggling with that. The realism of a charge at a month's well, it is not a charge in Article 3 of the amendment, it is an additional £25, the Minister for Treasury and Resources is already going to put it up from £100 to £200, that has not been ratified, so if any companies have sent out fee invoices then that is a bit odd because they cannot because they do not know what the rate is. To make it, instead of £100 increase, £125 increase, I just would like I know Deputy Noel attempted to explain it, but I am still finding this very odd because the bills are going out before the rate is set so I just have a problem with that and if someone can prove to me that it is impossible then I will continue to have a problem. With the second part of the amendment, paragraph 2, I think that there is a problem because that was brought in the middle of November so maybe the proposer can somehow deal with that. That is the "too late" but I think we do have to remind ourselves about the disbelief out there among the public about what we are talking about, G.S.T. going up 2 per cent, and then people shaking their heads and wondering whether the contribution of the finance industry matches in any way that 2 per cent or whether they are sharing the pain at all. That is just my second point. The third point is this question of marketing. Whether or not we put up the fees this time, I do have a problem because exactly the same will happen next year: the Budget will be drafted and it will be published towards the end of October, amendments will then go in more or less at the same time as they did this year, in the middle of November, and it will be too late again. There is a thing for Members to get hold of: if we do want to raise these fees then we would be able to do it next year or is this a perpetual game of never being able to do it? Will this make a difference, will this doubling of the fees under 2 for some vehicles and the addition of £25 in the third part in part 3 of the amendment, will this make a difference to companies coming to Jersey or going from or leaving? I ask myself what attracts people to Jersey, why would they choose to be in Jersey and I looked on the Jersey Finance website. Jersey Finance, right on its front page: "Is proud to announce Jersey's recent accolades" and I do not hear anything about £25 on the I.S.E. fees. "Top offshore jurisdiction in the most recent Global Financial Centres index" and we are often told this about how brilliant Jersey is in the finance world: "Best offshore centre, Global Investor awards": "International Finance Centre of the Year step awards 2009/2010." "Best international finance centre International Fund and Product awards, 2010": "Top tier I.M.F. (International Monetary Fund) rating Jersey higher than the U.K. or the U.S." although I am not sure that is a very high benchmark, but top tier I.M.F. rating: "O.E. C.D . (Organisation for Economic Co-operation and Development ) G20 White List achieved since 2002." So we do have something to shout about but it is not whether or not we put £25 on the I.S.E. fee, it is the fact that we are the best in this field and we are judged to be the best by the people who know. The other sheet I looked at was: "Why Jersey?" out of all their downloadable files, which I thought: "That is the one, let us see what that says" because the good Senator Ferguson talked about marketing: this is it: "This is where you would go. History: one of the longest-established most politically-stable and respected international finance centres. Location: we have got flights everywhere, central time zone and we speak English" well, of a sort. "Co-operation, regulatory representation" I am just reading out the headings now: "Corporate climate, resources and tax." Not a word about the fees because, of course, when you are the best you really do not need to worry about £25 because the marketing is elsewhere, the marketing is based on the fact that you have the expertise to do what your clients want you to do. Honestly, that whole argument is a complete red herring, it is a complete nonsense. The other thing that I wanted to point out, which nobody else has mentioned, is that I asked the Minister for Economic Development yesterday to clarify something he said and he agreed that, in the past, Jersey-exempt companies paid more than they do now, substantially more. My recollection of reading J.F.S.C. (Jersey Financial Services Commission) annual reports was I think it was £600 was the standard rate for an international company, and it has now gone quite a way

down from that. [10:15]

I really cannot see the problem. The only issue for me, the only practicality, is the 2-leg question, otherwise there really is no problem with this amendment at all.

Deputy E.J. Noel:

Can I ask a point of clarification from the Deputy of St. Mary ?

The Deputy Bailiff :

As long as it is not a second speech, Deputy .

Deputy E.J. Noel:

No. Is he suggesting that we should only put up the basic I.S.E. fees by 2 per cent as we have done with G.S.T. instead of the 100 per cent that the Minister for Treasury is already proposing?

The Deputy of St. Mary :

Sorry, I was distracted, could you ?

Deputy E.J. Noel:

I believe that the Deputy of St. Mary suggested that we should be putting up the basic I.S.E. fees by 2 per cent, as we have done with G.S.T. but the Minister for Treasury is already, I would suggest, proposing 100 per cent increase. I am a bit confused by the

The Deputy of St. Mary :

No. I can explain this quite easily. I was comparing the effect of 2 per cent on your ordinary, average person in the street and we have understood from Deputy Southern you are talking about hundreds of pounds on the annual bill and I was comparing that to a raise of £100 on company fees in an industry which has a profit of £900 million.

Deputy M. Tadier :

Can I ask, I do not know if it is in order, but it is from the Minister for Treasury and Resources?

The Deputy Bailiff :

Not at this stage, Deputy , if you will forgive me. Members, certainly on the Deputies' side of the Chamber, will have noticed a gathering of very eminent people, including his Excellency, in the gallery, but also including the Right Honourable Lord McNally, who is the Minister of State for the Ministry of Justice and Deputy Leader of the House of Lords. Lord McNally is in the Island for meetings today and he has an extraordinarily busy schedule. I am sure on behalf of all Members you would like me to give him a very warm welcome to this Chamber. [Approbation] I am sorry, Deputy Tadier , you had a point of clarification.

Deputy M. Tadier :

What I wanted to ask of the Minister for Treasury and Resources is his proposal to increase the fees, when does that come in, is it next year or is it in 2012? I probably should know that but

Senator P.F.C. Ozouf :

I think I have already been quite clear: the fee increases are from 1 January. They have been indicated at £200.

The Deputy Bailiff :

Does any other Member wish to speak? Then, I call on Senator Le Gresley to reply.

10. Senator F. du H. Le Gresley:

I realise that we are probably all getting a little bit tired of the Budget debate and I am not proposing to go through everybody's speech who has spoken on these 2 amendments. What I would say is I would like Members to remember that this was part of a package, the first part was to increase income tax exemption limits. Those of you who recall, as Back-Benchers we were told: "If you want to come forward with amendments to the Budget, you have to find appropriate savings." This was my package for increasing income tax exemption limits and I had to find some money. That is why these were put together as a package. I realise that if you increase income tax exemption limits the actual money does not really affect that year, it is only when people start to pay tax, so there is an argument - and a very good argument - to say that the increases that I am proposing should really come into effect in 2012 because that is when the effect of the proposal I had for raising income tax limits would have needed the money. Unfortunately, because of the process that we have been through with this Budget debate, my income tax exemption proposal was lifted, dare I say, out of this amendment, debated before we even discussed G.S.T. It was rejected by this House by 26 votes to 22 and I warned Members that if you do not vote for this now, if you do not get your G.S.T. exemptions later or a lower rate of G.S.T., you will have done nothing to help middle-income people in Jersey. I warned you and this is exactly what has happened. [Approbation] So yes, I have kept this in the debate, and I have been under pressure to withdraw it, as you will imagine, but I have not withdrawn it because there is a principle here, the principle is the Treasurer's Budget is a package, he has told us that: "Do not unwrap my package because it all hangs together" and we have gone through the whole of this week trying not to unwrap his package. Well, my package was unwrapped [Laughter] and I am not happy about it, I am not happy at all. I am going to carry on with this proposition, I am not going to withdraw it and, like the Deputy of St. Mary would say, I have got 3 points to make and I have already made the first one, which was the package. [Laughter] The second one is morals. Yesterday we heard a lot about morals, we heard people say that morally it is wrong to tax food, maybe it is, and we saw Ministers voting to exempt food on their morals. I have got some morals as well and my morals say the finance industry must contribute more. I know the Minister will say he has doubled the I.S.E. fees to £200, but that is not enough, we want them to contribute more, I do anyway, and I hope the majority of Members do. I would say to Members I agree that part 2 is a big jump, I agree that, but I am still going to take a vote on it so you are not going to get away with it, but part 3 is quite practical. I say to people, and the point has been made by many Members, if they were fool enough to send out their letters saying the fee is £200, well, so be it, sorry you got it wrong folks, it is now £225. If you do not want to pass the £25 on, absorb it within your commissions and profits, that is what I say. I am very adamant about that. I accept many of you probably will not vote for 2, but I would like to see who would, 3, please stick with me on that one, it is not a problem to write a letter to a client and say: "I am sorry, the States decided in the Budget the fee would go to £225 and we need to charge you another £25." It is not a problem, I do not think it is a problem, anyway. My last point: need. Now I have lost the debate on income tax exemption limits, many people will say: "Well, there is no need for this, this is just wasting our time." Okay, so we still have a deficit, we still need some more money, do we not? £2.85 million here, would we not like to have that money to make things easier? That was a very good prompt there, schools. But I am not going to say school build. Most of you will remember that I had lodged another proposition: St. Martin Primary School. I pulled that one because the Minister for Treasury and Resources made me promises, made you promises and made the people of St. Martin promises that they would get their new school in 2 phases, but unfortunately it has to be 2 phases because we have not got enough money. £7.7 million is needed, £2.85 million will fund the first phase so if you approve this, St. Martin Primary School will have their new school sooner than later. Would the finance industry not be proud to have built the brand new primary school in St. Martin and they would all be invited to the opening and they would be able to donate furniture that they have bought free of G.S.T. [Laughter] what a wonderful arrangement that would be. Sir, I am going to ask for the vote to be

on each amendment and I maintain the amendments.

The Deputy Bailiff :

Do you call for the appel? The appel is called for on the 2 amendments which Senator Le Gresley has brought forward. I invite Members to return to their seats. The first vote is going to be taken on the first of these amendments and I ask the Greffier to open the voting.

POUR: 17

Senator A. Breckon

Senator F.du H. Le Gresley Connétable of St. Helier Connétable of St. Martin Connétable of St. Lawrence Deputy R.G. Le Hérissier (S) Deputy J.A. Martin (H) Deputy G.P. Southern (H) Deputy P.V.F. Le Claire (H) Deputy S. Pitman (H) Deputy K.C. Lewis (S) Deputy M. Tadier (B) Deputy of St. Mary

Deputy T.M. Pitman (H) Deputy M.R. Higgins (H) Deputy A.K.F. Green (H) Deputy J.M. Maçon (S)

CONTRE: 27 ABSTAIN: 0 Senator T.A. Le Sueur

Senator P.F. Routier

Senator P.F.C. Ozouf

Senator T.J. Le Main

Senator F.E. Cohen

Senator J.L. Perchard

Senator S.C. Ferguson

Senator A.J.H. Maclean

Senator B.I. Le Marquand

Connétable of St. Ouen

Connétable of Grouville

Connétable of St. Brelade

Connétable of St. Clement

Connétable of St. Peter

Deputy R.C. Duhamel (S)

Deputy of St. Martin

Deputy J.B. Fox (H)

Deputy of St. Ouen

Deputy of Grouville

Deputy J.A. Hilton (H) Deputy J.A.N. Le Fondré (L) Deputy of Trinity

Deputy I.J. Gorst (C) Deputy A.E. Jeune (B) Deputy A.T. Dupré (C) Deputy E.J. Noel (L) Deputy T.A. Vallois (S)

The Deputy Bailiff :

I will ask the Greffier to reset the system and to open the voting on Senator Le Gresley's third amendment seeking an increase in the basic I.S.E. fee. I ask the Greffier to open the voting.

POUR: 20

Senator A. Breckon

Senator F.du H. Le Gresley Connétable of St. Helier Connétable of St. Martin Connétable of St. Lawrence Deputy R.G. Le Hérissier (S) Deputy J.A. Martin (H) Deputy G.P. Southern (H) Deputy of St. Ouen

Deputy J.A. Hilton (H) Deputy P.V.F. Le Claire (H) Deputy S. Pitman (H) Deputy K.C. Lewis (S) Deputy M. Tadier (B) Deputy of St. Mary

Deputy T.M. Pitman (H) Deputy T.A. Vallois (S) Deputy M.R. Higgins (H) Deputy A.K.F. Green (H) Deputy J.M. Maçon (S)

CONTRE: 24

Senator T.A. Le Sueur Senator P.F. Routier Senator P.F.C. Ozouf Senator T.J. Le Main Senator F.E. Cohen Senator J.L. Perchard Senator S.C. Ferguson Senator A.J.H. Maclean Senator B.I. Le Marquand Connétable of St. Ouen Connétable of Grouville Connétable of St. Brelade Connétable of St. Clement Connétable of St. Peter Deputy R.C. Duhamel (S)

Deputy of St. Martin

Deputy J.B. Fox (H)

Deputy of Grouville

Deputy J.A.N. Le Fondré (L) Deputy of Trinity

Deputy I.J. Gorst (C) Deputy A.E. Jeune (B) Deputy A.T. Dupré (C) Deputy E.J. Noel (L)

ABSTAIN: 0

2. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): fifth amendment (P.157/2010 Amd.(5))

The Deputy Bailiff :

Very well, we now come on to amendment number 5 in the name of Senator Breckon and I ask the Greffier to read the amendment.

The Deputy Greffier of the States:

On page 2, paragraph (b) after the words: "As set out in the Budget Statement" insert the words: "except that the estimate of total taxation revenue shall be increased by £5 million by increasing the rates of stamp duty for probate or letters of administration as follows." So there are 2 columns here: "If the net value of a personal estate is sworn" and: "The proposed stamp duty: not to exceed £10,000 will be nil, to be between £10,001 and £100,000, 1 per cent, between £100,001 and 500,000, 1.5 per cent, to be between £500,001 and £1 million, 2 per cent, to be between £1,000,001 and £5 million, to be 3 per cent, to be between £5,000,001 and £10 million, to be 4 per cent, to exceed £10,000,001, 5 per cent."

The Deputy of St. Mary :

Sir, for clarification, may I point out to Members that if they cannot find it, it is because it is amendment 5 and in the running order it says amendment 4.

The Deputy Bailiff :

It is indeed amendment 5, Deputy . Senator Breckon.

1. Senator A. Breckon:

By way of background, I would just like to explain something to Members. I was an executor for an estate of a young person who died suddenly and the family who I knew did not want to deal with it and they asked me if I would do that, so I have an experience of dealing with an estate. I must say praise is due to the Judicial Greffier and the Deputy Judicial Greffier for the way that they handled this; because my surname was not the same as the deceased person, it does cause some difficulties, if you are making inquiries about someone's estate: why do you want to know? It is difficult until you get the Letters of Administration. Also, in particular, Lloyds TSB Bank were particularly helpful because they have a probate department which is dedicated to this and it helped me through the process, and the person who died did not leave a will - they died intestate - which again I was given guidance on. So I did have some experience of that. Having said that, basically, I was given by the family - because as I say emotionally they could not handle any of it - 2 carrier bags full of paperwork and said: "Can you sort this out, find out what it is all about and do it?" so I went through things.

[10:30]

Basically what it is about is finding out what is in there: the person is in a job so there are possibly wages, there are maybe bills to be paid, there are insurance policies and things like that so the actual process of probate, I would say to Members, is fairly straightforward and would be achievable by perhaps the average person with some guidance, and that is available, and I must again commend them through the Judicial Greffe, they were excellent in assisting me through that. But then why am I then bringing this? What Members should now have on their desks - there is a paper coming round which gives some ideas of fees that are charged quite recently - I want to come to that in a minute or 2. But if we are going to look at tax and spend then my contention is we should look at everything. I brought this a couple of years ago and it got defeated, but then I will bring it again because not that many years ago, as the Deputy of St. Martin might remember, I brought a proposition to cap mortgage relief and the Finance and Economics Committee of the day put comments down what an idiot I was, how Guernsey and the Isle of Man would benefit, we could not do anything to affect the housing market, the whole thing would collapse. A couple of years ago I brought something about ramping up the stamp duty, and it is on the Minister for Treasury and Resources' agenda for today, to do the very same thing that I proposed a couple of years ago. But the reason I say that is the comments of the Council of Ministers are in the same vein. I think it is excellent that this stuff goes on the record because when we come back to the main Budget debate, there were some things that were said, advice we were given, which was absolute rubbish, and I will prove that when we come round later. But the thing is, this is on the record and this - to me - is manna because I think the first 2 rules of the legal profession are: "Get it in writing" and the second thing is: "Do not write it down yourself." I think the Council of Ministers - not for the first time - finance committees and others have done it before, they fell into the trap. It is on the record which for me is enough for now. Again, it is to do with finance, and I will come to that in a minute or 2, because I understand there has been some lobbying from Jersey Finance, and this has happened before, because it is always good to hear from them. I do not know if their pro bono work includes protesting on their own behalf, but perhaps it does. But if Members will look at the paper I distributed, and I have taken that down and I have taken out this is a fairly straightforward case and, as you can see, I have made representation on the person's behalf,

the bits that are Tippexed out are Tippexed out for a reason because it identifies the person, and I have also Tippexed out the law firm. But as Members will see, the fee comes to very nearly £32,000, this is on the second page under the box, on an estate of £112,000. If Members are worried about fees, they need to be worrying about probate fees: they perhaps should be questioning some of these charges. I have given the breakdown of that because what I have asked for and I have not yet received is a breakdown of that. If I put my car in the garage, when I get the bill, it tells me if they put a tyre on, what they have done to the exhaust, how much it was; this does not say any of that so that is where we are. This is real life, this is happening. If I was in this business, I would be howling as well if somebody was going to perhaps make a difference to that because this is nice work if you can get it. No big deal, I was executor and I did not take any money for doing that and it was, I would say, fairly straightforward. Obviously this is a professional organisation and this is part of their business, the work of probate, so it is a different thing, but to me

Senator T.A. Le Sueur :

As a point of order, Sir, is this in any way relevant to the issue of stamp duty?

The Deputy Bailiff :

I must admit I am struggling with whether it is relevant. Why are the charges, Senator, which a law firm may have imposed for a particular estate, relevant to the amount of stamp duty which ought to be charged on the grant of probate?

Senator A. Breckon:

Protestations from the finance industry are about an increase in fees and this a fee that has been charged to a family for work that has been done and my contention is if there is an issue about fees, it is not about the probate fees, it is perhaps in this area more. The people who have

The Deputy Bailiff :

That, if I may so with respect, is not relevant to your amendment. There will be some legal fees which are considerably less than this, I regret to say there will be some legal fees which are more than this and I must say I am struggling with how relevant a particular bill is to the issue which is being debated, and we are certainly not debating legal fees today.

Senator A. Breckon:

Sir, the comment of the Council of Ministers within days of this amendment having been lodged, very strong representations have been made to the Minister for Treasury and Resources from Jersey Finance Limited and a number of representative bodies for different sectors of the finance industry. My link with that, Sir, is that they have a vested interest which, because they are getting some fees of various descriptions for this work, is part of their protest, if you like.

The Deputy Bailiff :

You are absolutely entitled to address that comment from the Council of Ministers.

Senator A. Breckon:

That is why I have used this for demonstration purposes of the type of fee and, as you say, some will be higher, some will be lower, some will not exist at all and the Judicial Greffe will deal with it. That is where we are and, as I say, the Council of Ministers made that comment. I do welcome

the comments of the Council of Ministers because that is constructive because we are looking at a time now when, as Senator Le Gresley has just mentioned, could we do with some more money and where from? For me, this was something that maybe could have been looked at, should have been looked at. It was adjusted a number of years ago but perhaps it could have been adjusted. But again, unless it comes up in a Budget debate or we can do that then the ordinary Member does not have that opportunity. The other thing is, this gets this subject - in some difficult times for us - into the public arena and of course it is entirely up to Members how they vote on that but I would contend that there is the possibility of raising extra money without doing too much harm to the level of business we do and where we do it. There are some figures contained in the report and the sort of bonus year, if this had been in place and no business had been lost, would have brought in an extra £21 million in the 2009 financial year. My estimate is that conservatively - with a small "c" - this could possibly bring in £5 million. Again this was raised before with the industry a couple of years ago, and again I did not see any substantial figures. I heard the howls but that was it, and the Minister for Treasury and Resources at the time was Senator Le Sueur who made virtually the same comments that are being made this time, but I believe this matter is definitely worth putting on the agenda. It is something that we must consider and if the House does not approve this today then somebody should look at it and increase fees because when it comes to things like harbour fees, we put them up every year. I am not saying we should put this up every year, but perhaps we should do that from time to time. With that, I make the amendment.

The Deputy Bailiff :

The amendment is proposed. Is it seconded? [Seconded] Does any Member wish to speak?

2. Senator P.F.C. Ozouf :

The Council of Ministers opposes this amendment and opposes it quite strongly. Senator Breckon brought a similar proposition in 2007 and that was rejected by the Assembly, 2 votes in favour, 39 against. I am afraid we have not managed to convince Senator Breckon on the basis of evidence of the danger that this proposes to our economic interests. This is an appealing proposition, and I regret that I am standing here opposing a proposition which could generate, on the face of it, more revenue. I am afraid that it is not the case. I am afraid that Senator Breckon, he made a number of points which I do not think are relevant at all, and display, if I may say, not a real understanding of how - which I will attempt very briefly to deal with - the financial services industry works and why this matters. There is a real danger that if this proposition were accepted there would be a withdrawal of bank deposits and other investments from Jersey. Stamp duty on probate, as I am sure Members know, applies to moveable assets like cash and shares. It applies to individuals who are resident and not resident in Jersey. The amendment by Senator Breckon proposes that the probate duty paid on moveable estates is increased by more than 5 times. Increasing the rates on probate duty risks individuals withdrawing their funds from Jersey and putting them in, in a more competitive place that do not have such a charge that would be imposed, as the Senator is proposing. Funds are deposited in Jersey banks. They are invested in Jersey funds and they are held in Jersey entities. That generates revenue and the Island generates fees from that. Those companies pay tax on those profits in Jersey. Large numbers of people are employed doing just that, to manage those assets and that cash, et cetera. A move to increase the probate duty to non- Jersey people to those levels will harm our competitiveness, it will cause a loss of jobs. It will cause the contrary to what Senator Breckon is proposing, it will reduce our overall revenues. It is almost disappointing to hear that just because representative entities make representations to this Assembly and to me in terms of what is in the economic interest of Jersey that they are doing something wrong. Jersey Finance making representations is wrong. I think that many people who work hard, who give up their time in Jersey Finance and others in terms of their pro bono work are looking out for the economic interests of Jersey, and yes I have had strong representations from the Jersey Branch of the Society of Trust and Estates Practitioners, the Jersey Association of Trust Companies, the Jersey Funds Association and a number lawyers, tax advisers, and individuals who work in Jersey's trust sector. They are expressing concern that the impact on this amendment would have on their industry, if it were to be approved. So why would a foreign investor deposit

cash in Jersey with the risk that when he dies he will be taxed at 5 per cent. That is the bottom line. When he could instead deposit that cash, very legitimately with all of our strong regulatory standards, but if they do deposit and they have good reason to do so, maybe they are a non-resident in the U.K. who are resident outside, there is an alternative. They can deposit it in Guernsey and

they will be taxed at 0.5 per cent, or the Isle of Man where they will just pay a nominal fee. Jersey already charges probate duty at higher rates than our closest competitor. Guernsey charges probate duty of 0.35 per cent compared with our rate of 0.75. The Isle of Man, as I said, only has a nominal sum regardless of the estate. Other countries charge nothing at all. These amounts are not punitive and people are, at the current levels, still willing to invest in Jersey even though there is evidence that since we removed the cap that this has deterred some investment, and I accept that. If these charges ..

The Deputy Bailiff :

I am sorry, Senator, we have become inquorate. I invite Members to return to the Chamber as soon as possible. We are now quorate.

Senator P.F.C. Ozouf :

I think I was just saying that the rates that we have in Jersey, they have been increased and they have deterred some investment, I accept that, but on balance we have made carefully judged decisions. The Senator suggests that increasing the rates of duty will raise that £5 million. I am afraid that this is simply illusionary. It will not happen. Two-thirds of all estates who pay probate duty in Jersey belong to people who are non-domiciled in Jersey. If large numbers of people take their money away from Jersey the amount of probate will fall. One example, if the Senator's amendment is successful the probate duty of an estate worth £15 million, say, would be increased by nearly £475,000. If that individual withdraws those assets - which they will - from Jersey, the Island will not only not get the £475,000, will lose the probate level that we already have, which we generate £112,000. Of course, we would lose all the benefits of having that investment activity in Jersey. I am afraid to say that wealthy people have choices, and they will have a choice of a more competitive jurisdiction. For Jersey-born people there are structures also that will be put in place inevitably to mitigate against these charges. These rates are competitive. There is little incentive for people to carry out those practices, but I suspect that if they were to be increased for residence - that is the smaller amount of the issue - then effectively we would be counterproductive in terms of raising revenue. I urge Members, this is a damaging proposition to Jersey. It is damaging because of the non-residents and so I hope Members do not have much more sympathy than they had the last time they voted on it, and they reject the proposition, and we do not take too long in doing so.

[10:45]

Senator T.J. Le Main:

Can I make a comment, Sir? I am very disappointed to see so few Members in this Assembly in this very important amendment, which has some dramatic ramifications for the Island. They should be in the Chamber listening to the Minister for Treasury and Resources and listening to the arguments for and against this amendment. I think it is quite serious.

Deputy P.V.F. Le Claire of St. Helier :

When the Senator left he made us inquorate. [Laughter]

3. Senator B.I. Le Marquand:

This proposition if passed will be very damaging to our banking industry, which is a vital part of our finance industry. The fundamental flaw is that the increase will apply not only to the estates - that is the moveable assets - of people who died domiciled in Jersey - that is with Jersey as their permanent home - but also to people who die domiciled outside Jersey. Now Probate in relation to Wills, Letters of Administration in relation to where there is no Will, are an application to the Registrar of Probate at the Judicial Greffe, so I therefore do know quite a lot about this because I used to oversee the operation of that as Greffier, to authorise executors or administrators to obtain the moveable assets in order to distribute them. It is not a death duty. It is a fee for a court service based on the value of the moveable estate. It also does not affect real property - that is land or other such real assets, immoveable assets - in Jersey. I have in front me complete lists of the stamp duty in relation to applications in 2009. I have that list by virtue of the place of domicile. I have it by virtue of the value of the estate, and I have it by virtue of the amount of stamp duty paid. I have had great enjoyment during some of the long debates, which were perhaps not that interesting or were rather predictable, in counting up all sorts of interesting figures, which I would like to share in detail with my colleagues, but I am not going to do that. I am going to share just nuggets of information from that. In 2009 more than 80 per cent of stamp duty came from people domiciled outside Jersey. However, there was one huge estate of a person who died domiciled outside Jersey with a value of more than £290 million. That alone produced £2,181,125. Also by number in 2009 there were 1,364 out of 2,000 applications non-domiciled in Jersey, 68.2 per cent. The problem is massively illustrated by that estate of £290 million plus. The fee, which was high enough as it was at over £2 million, a complete windfall, would in fact have been more than £14 million under this calculation, because what we would have effectively is a kind of tax - not a fee, but a tax - on the estate. That is completely in addition to any death duties, capital transfer tax, inheritance tax or whatever it might be called in the jurisdiction where the person was domiciled. Now it should be clear in my view to any Member that that sort of massive penalty or potential penalty would make us totally and utterly uncompetitive. Once it got out that there was a sort of risk of a hit to a person's estate they would not put their money in Jersey. They would put it anywhere else. So as it is, we have at the 0.75 per cent figure really quite a high figure of stamp duty, but it is complete and utter financial suicide to seek to increase it. It is unfortunate because if Senator Breckon had brought before this Assembly a proposition in relation to increase of stamp duty, in relation to those who died domiciled in Jersey, i.e. with their permanent home, then I believe we might have had some sort of sensible debate as to whether or not we were in favour of some kind of death duties, because this proposition would still have represented effectively a type of death duty and we could have had that debate; and I have arguments which I could present today in relation to that, but I am not going to do that because it is not necessary to do so on this occasion. So quite simply, this is an ill-conceived measure. If it had referred to domiciled in Jersey we could have had a debate and we would have been divided on that and I think it still would have gone down, but as it is, it is utterly

hopeless, and I very strongly urge Members to vote against.

4. Connétable M.K. Jackson of St. Brelade :

While I cannot support the amendment principally, because I do not think the proposer has thought the consequences through, as has been explained by previous speakers, I do empathise with his thrust with regard to charges on estates and costs of curatorships and such like. While I understand that you have ruled that this has no bearing to the proposition as such, I would urge the proposer to consider bringing a proposition to bring those under control, because I think it is a very valid point.