States Meeting Transcript - 24th September 2014

STATES OF JERSEY OFFICIAL REPORT

WEDNESDAY, 24th SEPTEMBER 2014

PETITION ........................................................................................4

1. The Connétable of St. Helier will present a petition regarding the future use of Gas Place.......................................................................................4

1.1 Connétable A.S. Crowcroft of St. Helier:................................................4

PUBLIC BUSINESS - resumption................................................................4

2. Draft Finance (2015 Budget) (Jersey) Law 201- (P.141/2014)...........................4

1. Deputy E.J. Noel of St. Lawrence (Assistant Minister for Treasury and Resources - rapporteur):..............................................................................5

1. Senator A. Breckon: .....................................................................5
2. Deputy J.H. Young of St. Brelade:.......................................................6
3. Deputy E.J. Noel: ........................................................................6

2. Deputy E.J. Noel: ........................................................................7

1. Deputy J.H. Young:......................................................................7
2. Deputy G.P. Southern of St. Helier:......................................................7
3. Senator A. Breckon: .....................................................................7

4. Deputy M. Tadier of St. Brelade:........................................................8
5. Deputy E.J. Noel: ........................................................................8

3. Deputy E.J. Noel: ......................................................................11

1. Senator A. Breckon: ....................................................................12
2. Connétable P.J. Rondel of St. John : ....................................................12
3. Deputy S. Power of St. Brelade : ........................................................13
4. Senator L.J. Farnham :..................................................................14
5. Deputy A.E. Pryke of Trinity :..........................................................14
6. Senator P.F.C. Ozouf :..................................................................15

7. Connétable J.M. Refault of St. Peter:...................................................18
8. Senator A.J.H. Maclean:................................................................19
9. Deputy J.G. Reed of St. Ouen:..........................................................19
10. Deputy M.R. Higgins of St. Helier:..................................................20
11. Deputy E.J. Noel:....................................................................20

4. Deputy E.J. Noel: ......................................................................21

1. Deputy J.H. Young:....................................................................22
2. Deputy E.J. Noel: ......................................................................22

5. Deputy E.J. Noel: ......................................................................23

3. Draft Finance (2015 Budget) (Jersey) Law 201- (P.141/2014) - Acte Opératoire ......25

3.1 Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........25

4. Draft Income Tax (Amendment No. 44) (Jersey) Law 201- (P.130/2014)..............25

1. Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........25

1. Senator I.J. Gorst :......................................................................27
2. Deputy E.J. Noel: ......................................................................27

2. Deputy E.J. Noel: ......................................................................27

1. Deputy R.G. Le Hérissier: ..............................................................27
2. Deputy E.J. Noel: ......................................................................27

5. Draft Income Tax (Amendment No. 44) (Jersey) Law 201- (P.130/2014) - Acte Opératoire ...............................................................................29

5.1 Deputy E.J. Noel (Assistant Minister for Treasury and Resources - rapporteur):........29 Senator P.F.C. Ozouf :........................................................................29

QUESTIONS.....................................................................................29

6. Urgent Oral Question....................................................................29

6.1 The Connétable of St. Helier of the Minister for Planning and Environment regarding .. .........................................................................................30 Deputy R.C. Duhamel of St. Saviour (The Minister for Planning and Environment):.........30

1. The Connétable of St. Helier:...........................................................30
2. Deputy J.A. Hilton of St. Helier:........................................................31
3. Deputy J.A. Martin of St. Helier:.......................................................31
4. Deputy E.J. Noel: ......................................................................32
5. Deputy G.P. Southern :..................................................................32
6. Deputy J.H. Young:....................................................................32
7. Senator P.F.C. Ozouf :..................................................................32
8. Senator L.J. Farnham :..................................................................33
9. Senator P.M. Bailhache : ................................................................33
10. The Connétable of St. John : .........................................................33
11. The Connétable of St. Helier:........................................................34

STATEMENT ON A MATTER OF OFFICIAL RESPONSIBILITY.........................35

7. The Minister for Economic Development will make a statement regarding the incorporation of the Ports of Jersey ....................................................35

7.1 Senator A.J.H. Maclean (The Minister for Economic Development):...................35

1. Senator L.J. Farnham :..................................................................36
2. Deputy R.G. Le Hérissier: ..............................................................36
3. Deputy R.G. Le Hérissier: ..............................................................36
4. Deputy G.P. Southern :..................................................................37
5. Deputy G.P. Southern :..................................................................37
6. Senator L.J. Farnham :..................................................................37
7. Senator S.C. Ferguson:.................................................................37
8. Deputy T.A. Vallois: ...................................................................38
9. Deputy S.Power:.......................................................................38
10. The Connétable of St. John : .........................................................39

PUBLIC BUSINESS - resumption..............................................................39

8. Freedom For Life Ministries: grant from Criminal Offences Confiscation Fund (P.123/2014)..............................................................................39

8.1 Deputy M.R. Higgins:..................................................................40

1. The Connétable of St. John:............................................................41
2. Senator P.M. Bailhache : ................................................................42
3. Senator B.I. Le Marquand:..............................................................42
4. Deputy M.R.Higgins:..................................................................42

9. Draft Road Traffic (No. 61) (Jersey) Regulations 201- (P.140/2014)...................43

9.1 Deputy K.C. Lewis of St. Saviour (The Minister for Transport and Technical Services): .........................................................................................44

1. Deputy M. Tadier :......................................................................44
2. Deputy S.G. Luce of St. Martin : ........................................................44
3. The Connétable of St. John:............................................................45
4. Deputy T.A. Vallois: ...................................................................45
5. Deputy J.H. Young:....................................................................45

6. Deputy R.G. Le Hérissier: ..............................................................46
7. Connétable M.P.S. Le Troquer of St. Martin:...........................................46
8. Senator L.J. Farnham :..................................................................47
9. Deputy K.C. Lewis :....................................................................47

10. Draft Freedom of Information (Miscellaneous Provisions) (Jersey) Regulations 201- (P.143/2014)..............................................................................49

10.1 Senator I.J. Gorst (The Chief Minister):................................................49

1. Deputy M.R.Higgins:...............................................................49
2. Senator I.J. Gorst : ...................................................................49

11. Draft Social Security (Amendment No. 22) (Jersey) Law 201- (P.144/2014)..........51

11.1 Deputy S. Pinel of St. Clement (Assistant Minister for Social Security - rapporteur):...51

1. Deputy M. Tadier :...................................................................52
2. Deputy R.G. Le Hérissier:...........................................................52
3. Deputy S. Pinel:.....................................................................53
4. Deputy S. Pinel:.....................................................................54

12. Jersey Appointments Commission: appointment of Chairman (P.147/2014)..........54

12.1 Senator I.J. Gorst (The Chief Minister):................................................54

1. Deputy R.G. Le Hérissier:...........................................................55
2. Senator S.C. Ferguson:..............................................................55
3. Senator P.F.C. Ozouf : ...............................................................55
4. Deputy T.A. Vallois:................................................................56
5. Deputy A.K.F. Green of St. Helier : ..................................................56
6. Senator I.J. Gorst : ...................................................................57

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................58

13. Deputy J.M. Maçon of St. Saviour (Chairman, Privileges and Procedures Committee): 58

ADJOURNMENT................................................................................59

[9:30]

The Roll was called and the Greffier of the States led the Assembly in Prayer. The Bailiff :

Members will have received a supplementary Order Paper and in particular this lists a number of matters which have been presented since this Assembly first started sitting. They are listed under C, and similarly there are some lodged propositions under D. Connétable , I think you wish to present a petition, is that correct?

PETITION

1. The Connétable of St. Helier will present a petition regarding the future use of Gas Place

1.1 Connétable A.S. Crowcroft of St. Helier :

Yes, if I could be permitted to say a few words before I present it. Thank you. Perhaps 2 things need to be said about this petition which seeks to halt any determination of the planning application on the Jersey Gas site. First of all, that the petition has had to be really rushed into the States because of the Minister's determination to press on with the processing of the application tomorrow, and therefore a lot of the petition papers are still out there having been taken around nearby residents. I need to apologise to members of the public who have been pursuing this petition that their efforts have had to be stopped and a lot of petition papers will not have made it on to this list. Secondly, I would like to point out that under the old committee system of

government, if a committee president knew that a petition was being collected, the first thing they would have done would be to await the arrival of that petition so it could be given consideration by the States Assembly. I can only hope that the Minister for Planning and Environment will give the same respect to this petition which it is now my privilege to hand up for lodging. Thank you.

The Bailiff :

Very well. Yes, and in accordance with the Standing Orders to be referred to the Minister for consideration.

The Connétable of St. Helier :

Yes, please.

Deputy T.A. Vallois of St. Saviour :

Sir, may I raise the défaut on Deputy Southern , please? The Bailiff :

Yes. Does the Assembly agree to raise the défaut on Deputy Southern ? The défaut is raised. Now, as Members will have seen, I have given leave for an urgent oral question from the Connétable of St. Helier and there is also a statement to be made by the Minister for Economic Development. But if Members agree it seems to me we should first of all deal with the legislation for the Budget and then perhaps bring in the statement and the question at that stage before moving on to the rest of Public Business.

PUBLIC BUSINESS - resumption

2. Draft Finance (2015 Budget) (Jersey) Law 201- (P.141/2014) The Bailiff :

So therefore, we will return to the Order Paper and the next matter is the Draft Finance (2015 Budget) (Jersey) Law, Projet 141, lodged by the Minister for Treasury and Resources and this is to bring into effect the matters in the Budget, and I will ask the Greffier to read the citation.

The Greffier of the States:

Draft Finance (2015 Budget) (Jersey) Law. A law to set the rate of income tax for 2015 and to amend the Income Tax (Jersey) Law 1961, the Customs and Excise (Jersey) Law 1999, the Goods and Services Tax (Jersey) Law 2007, the Stamp Duties and Fees (Jersey) Law 1998 and the Taxation (Land Transactions) (Jersey) Law 2009. The States, subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following law.

The Bailiff :

Yes, Assistant Minister, and just so that Members are clear, there should be with Members 2 further amendments to the papers to reflect decisions taken over the last 2 days. So hopefully Members have that. There is an amendment to page 70 in Article 11 and an amendment to page 70 in Article 12. Assistant Minister.

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

Following the decisions reached in the Budget debate yesterday, the Draft Finance (2015 Budget) (Jersey) Law, as amended, proposes a standard rate of income tax and the income tax exemption thresholds for 2015. It sets out the impôt duties for 2015 and it reduces the stamp duty and land transactions tax payable on residential mortgages debt and properties worth not more than £400,000. In line with the amendments agreed by the States it amends the rates of stamp duty and land transaction tax applied to certain first-time buyer transactions. It also creates a higher rate of duty which applies to domestic property transactions worth in excess of £1 million. It also makes some other relatively minor amendments to the Income Tax Law or G.S.T. (Goods and Services Tax) Law and Stamp Duty Law. I move the principles.

The Bailiff :

Are the principles seconded? [Seconded] Senator L.J. Farnham :

Can I raise the défaut on Senator Ozouf ? The Bailiff :

Does the Assembly agree to raise the défaut on Senator Ozouf ? The défaut is raised. Does any Member wish to speak on the principles? Yes, Senator Breckon.

1. Senator A. Breckon:

The issues that concern me within this are the continual increase on impôt on wines, spirits, beers, cigarettes and fuel. The reason for that is, it is, in effect double taxation because when a 1 per cent increase is proposed in the Budget, when it translates to the industry it comes out as 4 or 5 pence or something like that, they usually say well, they are reviewing their costs and whatever else, and also G.S.T. is added to it as well. If Members want any evidence of that if they look at something that is commonly known, the price of petrol. I know Senator Ozouf , something he has looked at over the years,  is the difference between the base cost of some of these things whether it is cigarettes, and I know in that the J.C.R.A. (Jersey Competition Regulatory Authority) did a report, I think the report cost about £70,000 and as a result of that I am not sure anything has happened. One of the issues was the fact that there was a Channel Island health warning, if that was taken, if that would reduce the price. There were other things and I think it is a fantasy really to believe that if we put more on duty that the retailers will hold that and reduce their margins; it just does not happen.

The Bailiff :

Senator, sorry to interrupt but just to be fair, the Assembly has, of course, already agreed this in the Budget. This is just to bring into effect what the Assembly has already agreed by way of agreeing the Budget and I do not think it would be a productive use of time to re-debate the Budget when simply dealing with the legislation to give effect to what the Members have already decided on.

Senator A. Breckon:

The reason for me saying some of that is that I would ask that some of those Articles are taken separately so that a separate vote can be taken on, I think it is Articles 7 to 10 on that.

The Bailiff :

Yes, any Member has the right to ask for that. Senator A. Breckon:

I would ask the Assistant Minister to do that and that, what I have just said, is the reason for doing that because I do not believe in the end that it is inflationary and other things and things that are mentioned. So for those reasons, I would ask that those Articles are taken separately.

The Bailiff :

Those are Articles 7, 8, 9 and 10. Very well. Does any other Member wish to speak? Deputy Young, I have seen, on the principles.

2. Deputy J.H. Young of St. Brelade :

Partly a point about stamp duty in relation to first-time buyers and partly a question, I suppose. I am finding it difficult to identify exactly where within this draft law we are helping first-time buyers on the stamp duty on the purchase as opposed to stamp duty on the borrowings. I see in this law, Article 11, but I regret I have not got the amendments before me as a result of the amendment discussions. So, I suppose the point I want to make is that I am still unhappy about the fact that there are additional tax being imposed on first-time buyers on properties up to £450,000 which I do not think is right in the current circumstances. If I can have a clarification, exactly point me to the Article in this law where it is included because I am having trouble identifying that. But nonetheless, my point remains is that first-time buyer provisions stamp duty; what we have ended up approving in the Budget is an increase on those transactions and I am discontent with that.

[9:45]

The Bailiff :

Does any other Member wish to speak on the principles? Then I invite the Assistant Minister to reply.

3. Deputy E.J. Noel:

To deal with Deputy Young's point first. There is a new Article to account for his amendments to the first-time stamp duty, it is going to be Article 12 and I will deal with that when we come to the detailed Articles. With regard to Senator Breckon, I am happy to take the votes on those items separately. I maintain the principles.

The Bailiff :

All those in favour of adopting the principles, kindly show? Those against? The principles are adopted.

Connétable S.A. Rennard of St. Saviour :

Excuse me, Sir, may I raise the défaut on the Deputy of St. John ? The Bailiff :

Yes, very well, Connétable . Does the Assembly agree to raise the défaut on the Connétable of St. John? The Deputy of St. John. The Connétable is clearly here. [Laughter] He cannot be missed. The défaut is raised on the Deputy of St. John. Yes, so then, Assistant Minister, coming to the Articles. Given what Members have said, would you wish to propose Articles 1 to 6 en bloc together?

2. Deputy E.J. Noel:

If I can do, Sir. I will just run through those Articles quickly. Article 1 sets the standard rate of income tax for 2015 at the rate of 20 per cent. Article 2 provides that the taxpayer who has returned to the Island after a period of non-residence of at least one year will pay tax by way of I.T.I.S. (Income Tax Instalment System) on the current year basis when taking up employment or working as a sub-contractor. Article 3 caps the mortgage interest relief available to marginal taxpayers at £15,000 for 2015 and for future years. Article 4 sets the income tax exemption threshold for 2015 year of assessment for individuals, married couples and civil partnerships. Each of the exemption thresholds have been increased by 1.7 per cent and then rounded as appropriately. Article 5 extends the availability of the double taxation credit relief on foreign income arising in a jurisdiction with which Jersey has an applicable double taxation agreement to marginal tax ratepayers. Credit being capped at the amount .. sorry. The .. [Aside] the credit being capped at the amount of the foreign tax paid on the relevant income. Article 6 amends the law to ensure that all oil supplying companies, other than the retail outlets as defined, pay tax on their profits at 20 per cent. I propose Articles 1 to 6.

The Bailiff :

Very well, are Articles 1 to 6 seconded? [Seconded] Does any Member wish to speak on any of those Articles? Deputy Young.

1. Deputy J.H. Young:

Article 2. I wanted to point out the situation of somebody who is on a previous year tax basis who leaves the Island and goes away to work in year one, let us say, elsewhere and enters into another tax jurisdiction and has to pay tax currently and they will of course still have their liability hanging over from previous years. Will this not bind pretty severely on people finding themselves having to pay more than one year's tax at once, effectively by it being moved swiftly from a prior year basis, where they are catching up their liabilities, on to a current year? I make the point, for example, if people lose their jobs, one of the extra double whammies they get, as well as losing their job and their income dropping down, in year 2, they have lost their job, they have lost their income and they have got a hangover from tax liabilities from previous years which is a real struggle to deal with. So having this requirement where you are going to impose on them, all of a sudden when they come back they have got an immediate requirement, seems to be a pretty unfair penalty. I am really discontent with this.

2. Deputy G.P. Southern of St. Helier :

I wonder if the Assistant Minister has, at his fingertips, the portions of those paying past year income tax and those paying present year income tax and whether any moves are afoot to bring everybody on to current year tax.

3. Senator A. Breckon:

I wonder if I can ask the Assistant Minister if he could explain in Article 6, the new paragraph (4) where it says: "In this Article regional outlet means a facility from which hydrocarbon oil is sold directly to the public solely for use as fuel in motor vehicles or boats." If that is the only change, could I ask the Minister to explain the current situation on the levelling of duty on boat fuel?

4. Deputy M. Tadier of St. Brelade :

Just on Article 1, the 20 pence in the pound is something that I cannot agree with. When we know that we are facing difficulties that is the first thing we should be looking to vary. It is completely wrong, in my opinion, that there are people very able to pay, I daresay even people whose earnings on their interest which outstrips the average earning of many Islanders, are still paying the same tax rate basically at 20 per cent when there is scope there for increasing that. I do not believe the old mantra that there is anything sacrosanct about the 20 pence in the pound. We know there are issues with Jersey's underlying tax base of 0 per cent, which is an issue, but those who have vast amounts of wealth in Jersey, I believe would be willing to pay more and we could see a much more productive society, a much more equal society as a result, and that is something that will need to be pushed in the future. So I will not be supporting these Articles primarily because of Article 1.

The Bailiff :

Does any other Member wish to speak? Very well, I call upon the Assistant Minister to reply.

5. Deputy E.J. Noel:

I will deal with Deputy Tadier 's point first, and he is entitled to his opinion. It is a shame he did not bring an amendment to the Budget debate yesterday. To go back to Deputy Young's Article 2, this really is to capture those people who have left the Island for in excess of a year that when they come back they are treated in the same way as anyone else coming to the Island, that they pay on a current year basis because we do want to move all taxpayers over time to the current year basis. On to Deputy Southern 's question, the portion of current year basis payers versus prior year basis payers is roughly 25 per cent current year, 75 per cent prior year. We are looking at, in the long- term tax policy, to gradually move people from a prior year basis to a current year basis but that is going to be quite difficult to deliver in practice. There is a cohort of people who currently do not pay tax because of the exemption thresholds. Those could easily be moved to a current year basis because it has no effect. But this is a long-term project that needs to be built in with independent taxation and the rest of the modernisation of the tax system. Article 6, to answer Senator Breckon's question, this measure effectively closes a loophole in the existing law that has been identified. There is no evidence to date that this loophole is being exploited but it just means that we are closing down that potential loophole which means that there is no escape for a utilities company or an oil providing company not to pay tax at the utility rate of 20 per cent. I maintain the Articles.

The Bailiff :

All those in favour of adopting the Articles .. the appel is called for in relation to Articles 1 to 6. Deputy J.H. Young:

Can I have Article 2 separately, please?

The Bailiff :

Yes. Deputy Tadier , do you wish Article 1 separately?

Deputy M. Tadier :

Yes, please.

The Bailiff :

Very well, so the first vote will be on Article 1. I invite Members to return to their seats and the Greffier will open the voting.

The Bailiff :

Then we come to Article 2, also to be taken separately, so the Greffier will reset the machine and open the voting.

The Bailiff :

Then we come to Articles 3 to 6 together and the Greffier will open the voting.

The Bailiff :

Very well. Then we come, Assistant Minister, may I suggest you take the excise duty Articles together and then we can have separate votes if any Member wishes? So Articles 7 to 10.

3. Deputy E.J. Noel:

Article 7 sets the impôt duties on alcohol from 1st January 2015, and to remind Members, the

increases in duties are equal to the following: 21.7 pence on a litre of spirits, 2.4 pence on a bottle

of wine, nothing on a pint of standard beer, 1 pence on a pine of strong beer. The changes to the

cider duty rates align in with the corresponding duty rates for beers resulting in a simplification of

the impôt regime and corrects an anomaly that is currently present. Article 8 sets the impôt duties

on tobacco from 1st January 2015, the increase being 22.4 pence on a packet of 20 king-size

cigarettes. Article 9 sets the impôt duties on motor fuel from 1st January 2015.  The impôt duties to

that effect are a 2.1 per cent increase on the duty rates for 2014 will add 1 pence to the price of a

litre of unleaded petrol. Article 10 is the last Article relating to impôt duties and sets the rate of

vehicle excise duty from 1st January 2015. The rates set out in the table included in Article 10

have been increased by 1.7 per cent from the vehicle rates of duty for 2014. I propose Articles 7 to 10.

The Bailiff :

Are they seconded? [Seconded] Does any Member wish to speak on any of those Articles? Senator Breckon.

1. Senator A. Breckon:

Just to say that is easy to include these in the budget increases because over the years there has been various opposition usually from the trade and that is understandable because there are reasons now in the prices of some of these things that we are well out of step with other places and they are easily comparable, if you compare a branded good whether it be a spirit or cigarettes or something like that and inquiries have been done to death, as it were, but nothing has come out of that. The other thing, it is inflationary as well because it will feed into the retail price index so it is a bit, in that respect, self-defeating and I think, you know, we have heard others say during this debate earlier about supporting tourism. Well, it is not the only reason that people come here but when people see some of the prices and they can also view things in airports, duty-free and see really there are some significant price differences. Although there may well be health reasons for doing this, I think we cannot keep on doing this, you know, somebody needs to look hard at the situation because we are out of step with other places. For those reasons I will be opposing all of these Articles.

1.3.2 Deputy M. Tadier :

Specifically on 7 and 8. The problem we get recurrently is that the Government does not have a joined up strategy when it comes to dealing with the legal highs of tobacco and alcohol. We are quite happy to tax it and try and tax it out of existence, at least that is the rationale that we are given, but in fact, as I have said, there is no underpinning strategy, there is no date, for example, in the future whereby we want to make Jersey a smoke-free Island. We are quite happy to just carry on taxing people with an addiction, and, as somebody who has recently kicked the habit of tobacco, I know that that is an addiction, it is something that people do not do rationally and there are also people we know will .. some of us will be going to Silkworth Lodge tonight where we see the great work that that charity does with addictions of various kinds, including alcohol. We are taxing people with an illness rather than going for a harm reduction strategy in a joined up way which I think is philosophically contradictory and problematic. We have not done anything to address duty-free in the Island. We are quite happy on the one hand to keep on putting up tobacco prices, not exponentially but far above the rate of inflation, and at the same time have a tax avoidance mechanism working here at the airport and on the boats because we still love the revenue that comes from tobacco sales and those companies obviously depend on it for their prices. So I am not saying it is an easy solution .. it is an easy problem to solve but I think it is fundamentally wrong to tax things that are highly addictive in this way especially when we are not dealing with the root problem in a joined up way. We know that alcohol and especially tobacco, which has no real leisure effects, whereas we know small consumptions of alcohol can be good for one even. So we are not looking at this in a joined up way. I cannot be supporting these and I have supported increases in tobacco in the past but until we have got a proper joined up strategy this is purely a regressive tax which hits many of the poorest workers in the Island who do fall into the dependency trap and I do not know why we are seeking to raise revenues from the most vulnerable section in society.

[10:00]

2. Connétable P.J. Rondel of St. John :

I come from the other end on this one. Given that we are only looking at putting a penny or point something of a .. on things like alcohol, and as far as I am concerned that is not where the problem lies. We see the price of a pint of beer, for instance, in Jersey at £3, a local beer, and you are getting a pint of beer in the U.K. (United Kingdom) where taxes are much higher at 50 pence a pint less and more and I have got no problem with that at all, with what we are doing here. But some way needs to be found to rein in the traders who are .. every time we put a penny on a pint they seem to put a 10 or 12 pence increase to the public. That is where the problems are lying. It is a cash cow and some way really needs to be found to reel these people in, possibly put a larger hike on the tax and some way put a cap on what they can increase their cost by. That is of concern and in the reverse maybe drop the .. what you are picking up on the alcohol you might be able to drop the cost of putting a tax on the fuel given that there are still parts of this Island that require vehicle transport to get around and everywhere is not well served with ..

The Bailiff :

There appears to be another telephone somewhere near you.

The Connétable of St. John :

Yes or maybe there is a computer. I have lost my train of thought. The Bailiff :

Sorry.

The Connétable of St. John :

Where the fuel may .. it is beneficial to getting around because there is not a bus service right across the Island in all areas. I know my closest bus stop is about half a mile away, in the area I live, and consequently I would prefer to see the fuel kept down if alcohol has to go up. But some work needs to be done from within this Chamber in capping the huge increases we see by the traders. Thank you.

3. Deputy S. Power of St. Brelade :

I object and I get infuriated with this Treasury rite of passage every year that seems to suggest that year on year in this Island, on this Island, the Minister for Treasury and Resources and his staff can increase impôt and fuel charges and other charges across this Island when middle income Jersey is struggling all the time. We have a clear picture of how middle income Jersey is struggling. We have a clear picture of what Senator Farnham has said on more than one occasion about the importance of the hospitality industry and the tourism industry to Jersey, and yet for the larger part our prices are higher than many prices in many cities in the U.K., and yet we have this 2-step between the Health Department and Treasury on some thinly disguised argument that by increasing impôt we are in some way improving the health of Islanders. I do not agree with it, I will never agree with it and I come from the background that I am a former smoker, I no longer drink and I have no vested interest in this industry but I do believe that we are punishing those that live moderate lives, do not drink to excess and try and run cars and motorbikes and take their kids to school, and yet it is completely ignored by the Treasury team. We talk about health on this Island and we talk about impôt at the same time, and yet the States lease the biggest duty-free shop at the airport to anyone coming and going from the Island. What kind of hypocrisy is that? What kind of hypocrisy is that? We either embrace the Island's image of a healthy duty-free trade at the airport or we stop this nonsense on this constant ritual increase of impôt every year. I would say to the Minister for Economic Development, take a close look at your harbour, Minister. Take a close look at your harbour and start selling the same duty-free and perhaps fuel at the harbour rather than just at the airport. Let us do it properly rather than half measures. I am going to vote against impôt again this year. I decided not to do an amendment because it would have been a waste of time and the mood of the Assembly was not for it. But again, I repeat what I say, that this is a rite of passage that must be reviewed at some stage because we are going to price ourselves out of the hospitality, the tourism, and indeed for those locals who live moderate lives and again they have to face this .. these increases when I believe they are utterly unjustifiable. Thank you.

4. Senator L.J. Farnham :

I think the problem lies with a lot of the pricing is with distribution not just in wines and spirits but in tobacco where there exists an untenable monopoly, in my opinion, and of course we know the challenges of fuel because we are, on the world stage, an absolute tiny market so it is very difficult to introduce real competition in the distribution of that. It might be easier if somebody invented an engine that ran on beer and then economies of scale might be easier with distribution. The hospitality sector was surprised that the duty levels were low. But of course the Minister for Treasury and Resources and Assistant Minister must not start patting themselves on the back yet because these lower than normal increases follow years of untenably high increases.

Deputy S. Power:

Senator Farnham runs the risk of patting the Minister for Treasury and Resources on the back. He needs to review what he is saying.

Senator L.J. Farnham :

No, I think the Deputy just needs to listen a little more carefully, with due respect. I am saying that the hospitality sector was relieved that the duty increases were lower than they have been for some years. We have had years of untenably high increases. I would like the Assistant Minister to explain why cider has to be brought up so much. I am not a cider drinker, if that is not a cliché. I would like him to explain that. But I would very much like to see a policy. If there is to be future increases we should never exceed a cost of living increase in any of the impôts it is just damaging for the industry. I think we have probably gone too far because the differential between prices now in Jersey and in certain U.K. towns and cities, and I know there is a big .. a difference in economies of scale. I think we stand a risk of really damaging our hospitality sector and, you know, putting shackles on the bars and hotels and restaurants who have to make a living if they are forced to continue to put their prices up. So, please .. I am pleased these increases are lower than usual but let us hope, for the next few years at least, whoever is Minister for Treasury and Resources and the Treasury team look to continue this as a policy. Thank you.

Deputy R.G. Le Hérissier of St. Saviour :

I wonder, could the Senator declare his interest just so that we have it on the record? Senator L.J. Farnham :

Yes, of course. I am a director of a hotel. I think that is well known by the Assembly. It is not a direct pecuniary interest in this instance.

Senator S.C. Ferguson:

Yes, I will declare an interest. I am an ex-smoker and a director of a no-smoking, no-drinking hotel. [Laughter] But, you know, during one of our hearings on the budget, the Assistant Minister said he did not think taxes should be used to affect behaviour and make social changes, so I wonder if he would like to comment on that. This is the nanny state again. It is penalising the whole population for problems of the few. The pensioner's pint and a smoke, and we have a growing ageing population, I would remind people, is sacrificed for the smaller proportion of people who need help and who are getting help from places like Silkworth. You know, the whole thing is totally inconsistent and I shall be voting against these.

5. Deputy A.E. Pryke of Trinity :

I will go on the health issues because a lot has been said about that, and just to carry on. I am a director, also I have got shares in the same hotel that Senator Ferguson has too. It is a very good one.

Senator S.C. Ferguson: Working for you?

The Deputy of Trinity :

Tobacco and alcohol are the most cause of the premature deaths in Jersey. This has been .. this is the area that we have looked at time and time again. It has been rehearsed and it has been mentioned in this Assembly time and time again. With the tobacco strategy a lot of good work has been done and I take Deputy Tadier 's comment, more could be done. Yes, more could be done. I, like him, would like to see Jersey in the future the first smoke-free Island. But we have got to be realistic as well. It is the biggest cause .. that and alcohol is the biggest cause of death, you just have to go into A. and E. (Accident and Emergency) at the weekends and you can see the effect of that. There is a lot of evidence that shows that increasing impôt duties does have an effect on the amount of people who smoke and the amount of people who drink; positive impacts. That is what we are aiming at is to improve people's health. The alcohol strategy, we have just .. the 3 Ministers, the Minister for Economic Development, the Minister for Home Affairs .. or 4 Ministers, the Assistant Chief Minister and myself have just lodged the alcohol strategy for the future. Some very good work is going to be done on there going forward. It is joined up and we are listening to all sectors, be it hospitality, be it on-licences, off-licences, and also obviously the health side of it too. So I will be supporting this because there is a lot of evidence around the world from W.H.O. (World Health Organisation) shows that increasing the impôt duty has a dramatic effect in people reducing the amount of alcohol, they spend, and also, very importantly, it stops younger people taking up the habit of smoking due to the price. Thank you.

6. Senator P.F.C. Ozouf :

I am acting in a supporting role today because the Assistant Minister has command and control. However, I will not let this part of the debate pass without making some observations because these are the normal chestnuts of a .. they are the annual event of the Budget. Frankly, there is a Twitter hashtag called Factcheck which is used when somebody says something that is wrong. If I can get my Twitter hashtag Factcheck out, let me just get a few things straight to Members because it is all very well knocking this issue around without looking at the underlying data. Just before making 2 or 3 observations about data, as opposed to hyperbole, rhetoric and emotion, I would say to Deputy Power, these .. please do not be so personal. In his remarks and in previous remarks he has said: "The Treasury rite of passage." These are not  matters for simply the Treasury or any other Minister, they are matters for this Assembly, and this Assembly is the one that confirms the duty rates, not .. we invite Members to a set of plans and then Members are free to amend them and they could be amended. Frankly, at this stage, you are probably .. I am surprised you are even not getting a little frustrated with Members this morning because if Members wanted to change the estimates, if they wanted to change matters in relation to duties, then we would be dealing with corresponding amendments today as a result of the decisions yesterday. But those have not. These are last gasps, if the smoking analogy would be taken. These are last gasps, let us have another prod at a Treasury team that is trying to do the right thing, that, as always, listens.

[10:15]

Now, let us get just a few facts straight. About punishing, because there is no rite of passage and there is no punishing and there is no attack on middle income either. The real issue, as has been the case for a number of years .. I declare an interest as an owner of a garage, only simply as a related issue. The real issue remains but is improving, and the J.C.R.A. are dealing with this, is the issue

of the underlying price comparison. The U.K. price of petrol is much higher than that of the U.K. People in the U.K. have to drive a lot longer, a lot further distance than ourselves and I would draw Members' attention, and I will circulate it if they have not read it, the U.K. Jersey price comparisons which sets out detailed tables in the report, which sets out the U.K. retail price and the Guernsey price and compares it. Then it strips out duty and tax and Members can see the underlying issue. I know that I have spoken probably every year since the then Senator Norman brought a .. we got the forecasts wrong back in the Finance and Economics Committee of 2000 and some money fell out of the sofa, and Senator Norman then brought forward a proposal to abolish all duty rates. I was asked by the former Senator Frank Walker , the president of the Finance and Economics Committee to research this issue. Nobody had previously had to really look at it, and it was from that analysis on I realised that there was a fundamental systemic problem with the way the market for duty products operates. These things have been long .. these issues have been long established and they are at the heart of the reason why the Treasury and the Assistant Minister is proposing these issues today. Things have improved, I have to say, on the 3 areas of duty. On the 3 duty products there remains serious issues which must be tackled. They have got the powers .. the J.C.R.A. has the power to do it. It is virtually impossible and it has proven to be immensely difficult to work with some of the most aggressive companies that the world sees in terms of getting the information on tobacco. Trying to get information from vested interests in the tobacco trade, which lobby, which have huge resources, which do not reveal facts, has proven to be extraordinarily difficult. In my time in the States I have never received such threatening, such strong letters when I have made observations about the tobacco industry. I am not giving way. If there is a point of order, I will.

Deputy S. Power:

Point of order, Sir. [Laughter] We are talking about the Jersey Budget not the macroeconomic tobacco industry.

The Bailiff :

That is most certainly not a point of order, Deputy Power. Senator P.F.C. Ozouf :

I will not be long but I just want to say that in relation to petrol matters, matters have improved but there is more work to be done, and the issue at the heart of this is the Treasury does not believe it should have a rite of passage but the Treasury does believe that we should be raising appropriate revenue from duty products in order to pay for the social programmes that we have been .. that Members are wanting to talk about. Deputy Power and others want investment in health care. Deputy Tadier wants investment in health care. Everybody wants a better education system. How do we raise the revenue to do it? It is appropriate and proper that we raise revenue, not to change behaviour and to preach to people, but where there is a product which is sold that has a detrimental cost to society, then it is appropriate that legislators make decisions on raising tax, and that is what we are doing. But underlying this, and I say to Deputy Power, his benevolence, his generosity, his incredible ability to have persuaded the Assembly a number of years ago on having no duty increases and he is asking now, at this late stage, he is going to vote again against the duty increases. The benevolence that he had when we had an emotional debate about St. Mary 's pub shutting and the destruction of the pub industry and the end of the world for drivers, was not then translated through the benevolence of the proprietors of the companies involved in this industry because the prices went up. [Approbation] That is the issue, and I say it at every Budget time and I will say it if I am here for future Budget times, the underlying issue is that Members make loose comments. Fact check, look at the underlying pre-tax profits .. pre-tax price of diesel and petrol and they are much higher, they are inexplicably higher. They are, in terms of mean prices, pre-tax

prices are certainly lower in Jersey but if you take out the duty and tax the prices are significantly higher, and they are inexplicably higher, and they are higher than other markets that have the supposed high costs like the Isle of Man. The Isle of Man has the same size of market, they have the same transportation issues that we do and yet their pre-tax profits are lower. I say that the market is not working and the issues to do with the fuel farm where the Minister for Economic Development's team has done excellent work, his team is doing excellent work in breaking the gridlock, the cartel that was available, that was being made on aviation fuel, which is hurting our transport people, our airlines because they will not buy fuel in Jersey. But they are breaking it with determination and it has not been easy. The behaviour of the players in this market is nothing short of disgraceful, and I will say that in this parliamentary privilege and say that I have evidence of that and it is wrong. I urge the Minister .. I know the Minister feels probably just as strongly as I do about this. Now, I think we are working and we have evidence. In relation to tobacco I say this. I say C.I.C.R.A. (Channel Islands Competition and Regulatory Authorities) has done a good valiant job in relation to trying to work this out, but against massive opposition by the tobacco lobby and they have got to deal with this issue. I want to raise tobacco duty but I do not want the retail price necessarily outside the increases that health say are the right thing to do. I also draw Members' attention, if I may, to the excellent work we have had also in previous Budget debates, and Deputy Power has made a number of inaccurate statements. We had previously scaremongering that there was, I think, £8 million revenue loss of tobacco smuggling. Well, I thank the Minister for Home Affairs for allowing his Customs Department to get approximately £18,000 to £20,000 worth of funding in order to establish exactly what the effect of the importation issues are. I do not know, Assistant Minister, whether or not .. maybe he will sum up because he will know, whether or not we have circulated the report from Home Affairs that we have because we have looked and I warmly congratulate the Home Affairs team on what they have done because they have stopped thousands of people, constructively and politely, and they have established the extent to which there is a duty-free issue of non-compliance. That is providing a very good set of information in order for the Assembly in future, I hope, to deal with the issue which I agree with Deputy Tadier on. I think we have got to cut the duty-free allowance of 200. It is crazy to have an issue whereby we are trying to prevent tobacco but we are having that issue where the 200 limit, we are within the

Customs union within the E.U. (European Union). International arrangements mean that we cannot abolish duty-free on tobacco but I have said before that in my view the limit should be brought down to the equivalent of the Australian number, which is packets of cigarettes in Australia sold in 25 packets and they have a duty import limit of 50. We could do the same with allowing a duty- free limit of only 40, not that that would in fact deal with the issue. But the issue remains is that our colleagues in Home Affairs would have an enforcement issue and that is why it is not being proposed and that is why it is not being progressed. But the report, the fact-based report, it is absolute nonsense to suggest that there is tobacco smuggling of £8 million. Our Customs have done excellent work and the report will be before Members. On alcohol, I would say one other thing. I do not know where Members .. I know Members are probably tired and they have had lots of papers, but I had yesterday, on my desk, a licensing strategy. A licensing strategy dealing with, at last, the issue of the off-licence and on-licence issue. Ministers have delivered. I think the Chief Minister, Minister for Economic Development, Minister for Health and Social Services, Minister for Home Affairs, have delivered. Thank you, Minister, a brilliant report; R.139, at last, dealing with the issues which we have raised in so many Budget debates in relation to alcohol issues. We know there is an alcohol problem, we know there is an off-licence and on-licence issue. There is the report, it is there. I urge Members to maintain. The Assistant Minister will sum up, eloquently, I am sure, but in relation to the facts. Let us get the facts right. The underlying prices of these issues are too high, the market is not working. When States Members feel they are doing people a favour, people think they are doing .. States Members are being populous by saying: "No, we are not going to put duties increases." It does not translate into working families and working individuals' decisions. There are issues of competition and they must .. they are being addressed. We have got better data, things are improving but as always, more work to be done.

Senator A. Breckon:

May I raise a point of order? The Bailiff :

If it really is a point of order. Senator A. Breckon:

It is. The Minister has just said that no Member has brought an amendment. Is it correct that you cannot bring a negative amendment, in other words do not do something, you must vote against it, as opposed to bringing an amendment?

The Bailiff :

No, in relation to the Budget you would bring an amendment saying: "Alter the figure for revenue from X million to X million minus £200,000" because you want to get rid of what they are going to do.

Senator A. Breckon:

I do not believe in it as it is so is it negative or is it .. The Bailiff :

You are entitled to bring an amendment to change the proposals of the Minister, and I have to say, the Minister is absolutely right. If Members really did not agree with what was being proposed in relation to these excise duty rises, they should have brought an amendment because the Assembly has approved the Budget which contains those figures, and really this debate ought to come to an end because that matter should have been dealt with by Members by way of amendment. You can vote against it now but you cannot now have a large debate about whether you should or should not be, that should have been done earlier.

Senator P.F.C. Ozouf :

Just for clarification, should some of these measures not do, and maybe some Members do want to wreck the Budget, but that will have an issue on the Consolidated Fund in relation to revenue.

The Bailiff :

Yes, this legislation is designed to bring into effect what the Assembly has already agreed in the voting. Now, if these measures are not passed then in fact the Budget will not work because there will .. some revenue measures will not take effect.

Senator P.F.C. Ozouf :

Just to clarify, what would be the position if we lost such revenue that we would compromise the Consolidated Fund? Just so that Members understand.

The Bailiff :

Well, you would have to bring back another measure to raise additional revenue so there would not be a deficit on the Consolidated Fund. Now, has any Member got anything which is really relevant to this particular matter? [Laughter] Connétable of St. Peter , you feel you have?

7. Connétable J.M. Refault of St. Peter :

Very briefly. I just wanted to remind Members of the cancer report which was delivered just a few weeks ago to this Chamber, which said we were the third highest in the United Kingdom for neck and throat cancers which are caused predominantly by the consumption of alcohol and tobacco. Any measure we do to reduce the suffering that those people go through in later life is one which I support. Therefore, I shall be supporting this Budget measure. Thank you.

8. Senator A.J.H. Maclean:

I of course always think I have something relevant to add. Others may disagree but I will be brief. After the Minister for Treasury and Resources liberally sprinkled praise around I just wanted to confirm, first of all, the good work that the airport management team have done with regard to the fuel market at the airport. That is going to make a significant change to the cost of fuel, drive more business, particularly in private aviation but more broadly, and I think that is to be welcome. What we need to see happening now is a similar approach with regard to the fuel farm. Islanders are paying far too much money for fuel. There is a disparity there and it is a matter that has got our attention and we will continue to work in order to drive those prices down to ensure that Islanders get a fair deal. The main point that I wanted to raise was in relation to comments from Deputy Power, emotive comments a little earlier on. In particular, he made the point and used the word "hypocrisy" in relation to duty-free at the airport, or the ports, but the airport specifically. I just would point out to the Deputy , and I am sure he is aware of that, as indeed will Members be, that if we were to take away duty-free from the airport there would of course be a significant impairment on revenues from the port. So whichever way you look at it, whether you are going to vote or whether we are going to put up duties impôts on alcohol and tobacco, if indeed that duty-free option is removed from the airport it will put up the cost of operation at the airport and consequently that will feed through ultimately to users of that particular facility. So it will be an indirect taxation. So there is no easy answer. It is of course, like all these matters, a question of balance. On that particular point, one final thing that I would mention is around the whole issue of impôts which comes up each year. We see, and have seen in recent years, fairly significant increases proposed, and in fact applied, for alcohol and tobacco. What I think is important is getting the balance right with regard to the impact on industries, important industries to the Island like tourism. Of course, our tourism industry does not these days survive, as it did several decades ago, on cheap booze and cheap fags.