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THE STATES assembled on Tuesday, 2nd December 1998 at 9.30 a.m. under the Presidency of the Bailiff ,
Sir Philip Bailhache ____________
All members were present with the exception of –
S e n at or Vernon Amy Tomes – ill
F ra n c is Herbert Amy, Connétable of Grouville – ill
R o b e rt Lester Le Brocq, Connétable of St. Helier – ill.
____________
Prayers ____________
Cottage Homes Committee – resignation of Committee
THE STATES accepted the resignation of Senator Corrie Stein, President of the Cottage Homes Committee, together with the members of the Committee.
Cottage Homes Committee – vacancy in Presidency
In accordance with Article 28(3) of the States of Jersey Law 1996, the Bailiff gave notice that there was a vacancy in the office of President of the Cottage Homes Committee.
BUDGET 1999 and amendments – P.238/98
THE STATES resumed consideration of the Budget 1999 and considered the estimates of the revenue income and of the expenditure of the Trading Committees.
T R A DING COMMITTEES
H a r b ours and Airport Committee H ar b o u r s – Pages 53 and 54
THE STATES, having considered the estimates of the Harbours and Airport Committee for the Harbours decided to allow the amounts of the said estimates as detailed in pages 53 and 54 of the Budget.
A ir p o rt – Pages 56 and 57
THE STATES commenced consideration of the estimates of the Harbours and Airport Committee for the Airport and adopted a proposition of Senator Jean Amy Le Maistre that for the Airport revenue expenditure there should be a reduction in the Directorate vote from £536,400 to £380,100.
Members present voted on the amendment as follows –
"Pour" (33)
Senators
S h e n ton, Horsfall, Rothwell, Le Maistre, Stein, Quérée, Syvret, Kinnard.
Connétable s
S t. L awrence, St. Mary, St. Brelade, St. Peter, St. Ouen, Trinity , St. Saviour, St. Clement. Deputies
W a v ell(S), H. Baudains(C), St. Mary, S. Baudains(H), Pullin(S), Duhamel(S), Layzell(B), Breckon(S
Grouville , St. Martin, St. John, Le Main(H), Blampied(H)V, ibert(B), de la Haye(B), St. PeterS,t. Ouen.
"Contre" (16)
Senators
B a il h ache, Norman, Walker . Connétable s
S t. M artin, St. John. Deputies
L e S ueur(H), Coutanche(L), Le Geyt(S), Trinity , Johns(H), Routier(H), Dorey(H), Huet(H), Rabet(H),
Crowcroft (H), Dubras(L).
THE STATES, having considered the estimates of the Harbours and Airport Committee for the Airport, as amended, decided to allow the amounts of the said estimates as detailed in revised pages 56 and 57 of the Budget.
Members present voted as follows –
"Pour" (47)
Senators
S h e n ton, Horsfall, Rothwell, Le Maistre,Stein, Quérée, Bailhache , Norman, Walker , Kinnard. Connétable s
S t. Lawrence, St. Mary, St. Brelade, St. Peter, St. Martin, St. Ouen, St. John, Trinity , St. Sav
St. Clement.
Deputies
W a v ell(S), H. Baudains(C), Le Sueur(H), Coutanche(L), St. Mary, S. Baudains(H), LGe eyt(S), Trinity ,
Pullin(S), Johns(H), Duhamel(S), Routier(H), Dorey(H), Layzell(B), Breckon(S), Grouville , Huet(H), St. Martin, Le Main(H), Blampied(H), Rabet(H), Crowcroft (H), Vibert (B), de la Haye(B), St. Pet Dubras(L), St. Ouen.
"Contre" (2)
Senator
S y v re t.
Deputy
S t. J ohn.
THE STATES, having considered the estimates of the revenue income and of the expenditure of the Telecommunications Board and the Committee for Postal Administration, decided to allow the amounts of the said estimates as detailed in the undermentioned pages of the Budget as follows –
T e le c ommunications Board – Pages 59 and 60
C o m m ittee for Postal Administration – Pages 62 and 63.
THE STATES noted a credit of revenue expenditure for each of the undermentioned Committees as shown on page 3 of the Budget –
£ Policy and Resources Committee 1,144,300 Finance and Economics Committee 56,617,700 Establishment Committee 3,687,000 Planning and Environment Committee 2,422,500 Health and Social Services Committee 78,872,600 Education Committee 60,064,000 Public Services Committee 16,792,800 Agriculture and Fisheries Committee 8,128,000 Tourism Committee 7,404,000 Defence Committee 21,544,900 Employment and Social Security Committee 54,000,000 Housing 706,000 House Committee 4,000 Legislation Committee 77,000 Sport, Leisure and Recreation Committee 3,906,000 Prison Board 4,460,100 Etat Civil Committee 70,000 Overseas Aid Committee 3,320,000 Broadcasting Committee 4,000
Special Committee to Consider the Relationship
between Committees and the States 10,000
THE STATES, referring to the summary of income and revenue expenditure appearing on page 69, agreed the total revenue expenditure in the sum of £456,517,800, being £386,807,200, from non-trading committees and £69,710,600 from trading committees; the total income in the sum of £155,579,400, being £63,538,400 from non- trading committees, £89,041,000 from trading committees and £3,000,000 return from the Financial Services Commission; and, having allowed for the total investment income in the sum of £8,000,000 and the estimated transfer to Trading Funds of £17,307,900, agreed the amount to be transferred to the General Reserve in the sum of £24,000,000.
THE STATES noted that on the basis of levels of taxation proposed by the Finance and Economics Committee the surplus on the revenue account to be transferred to the capital fund amounted to £4,411,100.
Having allowed for a balance of £43,794,200 to be brought forward at 1st January 1999, the transfer to the Strategic Reserve of £3,000,000, and taking into account the capital repayments and receipts of £59,547,400, the States noted that there would be available in the capital fund the sum of £104,752,700.
Consideration of the Budget was adjourned. Capital programme 1999
THE STATES, adopting a proposition of the Policy and Resources Committee, approved in principle the proposals included in the capital programme set out on pages 66 and 67 of the Budget.
THE STATES recommenced consideration of the Budget and proceeded to consider the estimates of capital expenditure recommended by the Finance and Economics Committee on pages 66 and 67 of the Budget and –
NON-TRADING COMMITTEES
The estimate of the capital expenditure of the Establishment Committee appearing on page 66 of the Budget was allowed.
The estimate of the capital expenditure of the Planning and Environment Committee appearing on page 66 of the Budget was allowed.
THE STATES commenced consideration of the estimate of the capital expenditure of the Health and Social Services Committee and considered an amendment of the Committee that on page 66, in the estimate of the Committee –
"( a ) there should be added the following items –
R o b i n W a r d – refurbishment – £340,000
C l i n iq u e P in e l – refurbishment – £859,000;
(b ) the Finance and Economics Committee in Vote No. C0070Capital Reserve Vote', for the amount of
£7,350,000 there should be substituted the amount of £6,151,000."
The President of the Health and Social Services Committee withdrew the amendment, having been assured by the President of the Finance and Economics Committee that in the event that the Health and Social Services Committee was able to carry out the works in 1999 the sum required would be brought forward from the year 2000 Capital allocation.
The estimate of capital expenditure of the Health and Social Services Committee appearing on page 66 of the Budget was allowed.
The estimate of the capital expenditure of the Finance and Economics Committee appearing on page 66 of the
Budget was allowed.
The estimate of the capital expenditure of the Education Committee appearing on page 66 of the Budget was allowed.
The estimate of the capital expenditure of the Public Services Committee appearing on page 67 of the Budget was allowed.
The estimate of the capital expenditure of the Defence Committee appearing on page 67 of the Budget was allowed.
The estimate of the capital expenditure of the Housing Committee appearing on page 67 of the Budget was allowed.
The estimate of the capital expenditure of the Prison Board appearing on page 67 of the Budget was allowed. THE STATES noted that the amount to be voted from the Capital Fund was £85,018,000.
THE STATES then proceeded to consider the estimates of capital expenditure to be financed from the Trading Funds on page 68 of the Budget and –
The estimate of the capital expenditure of the Harbours and Airport Committee appearing on page 68 of the Budget was allowed.
The estimate of the capital expenditure of the Telecommunications Board on page 68 was allowed.
The estimate of the capital expenditure of the Committee for Postal Administration appearing on page 68 was allowed.
THE STATES, having noted the estimated transactions of the Trading Funds, decided to allow the said estimates as detailed in the undermentioned pages of the Budget as follows –
T R A DING FUNDS
H a r b ours – Page 55
A i rp o rt – Page 58
T e le c ommunications Board – Page 61
C o m m ittee for Postal Administration – Page 64
THE STATES considered the estimates of income to be produced from taxation appearing on page 2 of the Budget and agreed the estimate as follows –
£ £
Impôts on spirits 4,239,000
Impôts on wines 3,536,000
Impôts on cider
Impôts on beer
Impôts on tobacco
Impôts on motor fuel
Goods imported into the Island Income tax
272,000
3,032,000
12,470,000
11,101,000
100,000 34,750,000 297,800,000
THE STATES commenced consideration of the draft Finance (Jersey) Law 199 and adopted the Preamble and Parts I, II and III.
Part IV was adopted, the States having rejected an amendment of Deputy Alan Breckon of St. Saviour that for Part IV there should be substituted the following Part –
"PART IV
Amendment of Income Tax Law in respect of personal allowances and reliefs
ARTICLE 5
( 1 ) In paragraph (1) of Article 92 of the Income Tax (Jersey) Law 1961, as amended (hereafter in this Part referred to as "the principal Law") for the words "three thousand four hundred pounds" there shall be substituted the words "three thousand five hundred and forty-five pounds".
( 2 ) In Article 92A of the principal Law –
( a ) in paragraph (1), and in the first, second, third and fourth provisos to paragraph (1), for the
words "ten thousand four hundred and twenty-five pounds" and "sixteen thousand seven hundred and fifty pounds" there shall be substituted the words "ten thousand eight hundred and seventy-five pounds" and "seventeen thousand four hundred and seventy pounds" respectively;
( b ) in the first proviso to paragraph (1) for the words"two thousand three hundred pounds or four
thousand six hundred pounds" in each place where they occur there shall be substituted the words "two thousand four hundred pounds or four thousand eight hundred pounds";
( c ) in the fourth proviso to paragraph (1) for the words"one thousand two hundred pounds" and
"two thousand four hundred pounds" there shall be substituted the words "one thousand two hundred and fifty pounds" and "two thousand five hundred pounds" respectively"; and
( d ) in paragraph (2) for the words"three-tenths" there shall be substituted the words "twenty-eight
per cent".
( 3 ) In Article 94 of the principal Law –
( a ) in paragraph (1) for the words"five thousand two hundred pounds" and "two thousand six hundred pounds" there shall be substituted the words "five thousand four hundred and twenty-
five pounds" and "two thousand seven hundred and ten pounds" respectively; and
( b ) in paragraph (2) for the words"four thousand one hundred pounds" there shall be substituted the
words "four thousand two hundred and seventy-five pounds".
( 4 ) In Article 95 of the principal Law – ( a ) in paragraph (1) –
( i ) in sub-paragraph (a), for the words"two thousand three hundred pounds" there shall be
substituted the words "two thousand four hundred pounds"; and
( i i) in sub-paragraph (b), for the words"four thousand six hundred pounds" there shall be
substituted the words "four thousand eight hundred pounds"; and
( b ) in paragraph (3), for the words"two thousand three hundred pounds" there shall be substituted
the words "two thousand four hundred pounds".
( 5 ) In paragraph (1) of Article 98A of the principal Law for the words"four thousand one hundred pounds" there shall be substituted the words "four thousand two hundred and seventy-five pounds".
ARTICLE 6
T h is Part of this Law shall have effect for the year nineteen hundred and ninety-eight and ensuing years.".
Members present voted on the amendment as follows –
"Pour" (8)
Senator
S h e n ton.
Connétable s
S t. M ary, St. Martin, St. Clement. Deputies
B r ec k on(S), Huet(H), St. Martin, Rabet(H).
"Contre" (26)
Senators
H o r sf all, Rothwell, Le Maistre, Stein,Quérée, Syvret, Norman, Walker . Connétable s
S t. B relade, St. John.
Deputies
H . B audains(C), Le Sueur(H), Coutanche(L),St. Mary, Trinity , Pullin(S), Johns(H), Routier(H), Dorey
(H), Layzell(B), St. John, Vibert (B), de la Haye(B), St. PeterD, ubras(L), St. Ouen.
Parts V, VI, VII, VIII, IX, X, First Schedule and Second Schedule were adopted.
THE STATES adopted in second reading a Bill to continue certain expiring fiscal Laws; to prescribe the standard rate of income tax for the year nineteen hundred and ninety-nine; to amend further the law relating to income tax with regard to the deduction on account of social security contributions, and in respect of reduction of tax on small incomes and in relation to annuity contracts; and to amend the Laws relating to wines and spirits duty, beer duty, tobacco duty and oils and spirits duty.
The said Bill was lodged "au Greffe" in second reading.
THE STATES, in pursuance of Article 25 of the Public Finances (Administration) (Jersey) Law 1967, as amended, have declared that the Bill to continue certain expiring fiscal Laws; to prescribe the standard rate of income tax for the year nineteen hundred and ninety-nine; to amend further the law relating to income tax with regard to the deduction on account of social security contributions, and in respect of reduction of tax on small incomes and in relation to annuity contracts; and to amend the Laws relating to wines and spirits duty, beer duty, tobacco duty and oils and spirits duty (which Bill has this day been lodged "au Greffe") shall immediately have effect as if it were a Law passed by the States and sanctioned by Her Majesty in Council.
THE STATES, having terminated the discussion on the Budget, agreed the summary of the estimated income and revenue expenditure for 1999 appearing on page 69 of the Budget as follows –
NCOME £ £ £
In come Tax 297,800,000 Im pôts 34,750,000 In vestment Income 8,000,000 340,550,000
LESS
Non-trading Committees
R evenue expenditure 340,807,200 C apital Servicing 46,000,000
386,807,200
A uthorised Revenue
E x pe nditure
R evenue Income 62,615,000 In terest on advances from
C a p ita l Fund 923,400
Inc ome 63,538,400 323,268,800
Fin ancial Services Commission
R e tu rn 3,000,000
320,268,800 20,281,200
Trading Committees
E xpenditure 69,710,700 In come 89,041,000 19,330,400
E stimated transfer to Trading Funds 17,307,900
2,022,500
22,303,700
ADD
E stimated surplus brought forward at
1 st January 1999 6,107,400 28,411,100
Appropriation to Reserves:
N et Appropriation to the General Reserve (24,000,000) B alance to be transferred to Capital Fund £4,411,100
THE STATES further agreed the estimated transactions of the capital fund for 1999 as follows – vised estimate of balance in hand at 1st January 1999 43,794,200
ansfer to Strategic Reserve (3,000,000) pital repayments and receipts 59,547,400 timated balance on revenue account
above) 4,411,100 104,752,700
pital Expenditure as
commended
the Finance and Economics
mmittee (see pages 66 and 67) 85,018,000
ss: Projects funded by Loan (35,000,000) nctions
50,018,000 Plu s : Loan sanction 5,000,000 payments
55,018,000 E s tim ated balance in hand
3 1 st D e c ember 1999 49,734,700
Income Tax (Amendment No. 19) (Jersey) Law 199 – P.232/98
THE STATES, subject to the sanction of Her Most Excellent Majesty in Council, adopted a Law entitled the Income Tax (Amendment No. 19) (Jersey) Law 199 .
THE STATES, in pursuance of Article 25 of the Public Finances (Administration) (Jersey) Law 1967, as amended, have declared that the Bill to amend further the law relating to income tax with regard to surcharge for late payment of tax, appeals against an assessment of tax, child care tax relief, instalment payment relief and taxation of profits of life assurance companies with a head office outside Jersey (which Bill was this day passed by the States as the Income Tax (Amendment No. 19) (Jersey) Law 199 ) shall immediately have effect as if i were a Law passed by the States and sanctioned by Her Majesty in Council.
Income Tax (Amendment No. 20) (Jersey) Law 199 – P.233/98
THE STATES, subject to the sanction of Her Most Excellent Majesty in Council, adopted a Law entitled the Income Tax (Amendment No. 20) (Jersey) Law 199 .
OECD and EU proposals on harmful tax competition – statement
The President of the Policy and Resources Committee, made a statement in the following terms –
" M u c h of what has appeared in the media about the impact on the Island of the OECD and EU proposals on harmful tax competition is inaccurate, and I should like to take this opportunity of putting the record
straight.
In a document presented on 17th November 1998 to the European Union Tax Code of Conduct Group,
which is chaired by the United Kingdom Financial Secretary to the Treasury, the United Kingdom Government tabled the following statement on the Island's constitutional relationship with the United Kingdom –
T h e U n it ed Kingdom Government is responsible for the defence and international relations of Jersey, and the Crown is ultimately responsible for its good government. However, the people of Jersey cannot vote in elections for the United Kingdom Parliament and it would be unprecedented for the United Kingdom to legislate for Jersey on taxation and other domestic matters without the agreement of the Jersey Authorities. Legislation on taxation matters has always taken the form of laws enacted by the Island legislature.'
T h is statement sets out the constitutional framework which the Insular Authorities had very much in mind
when, at their request, Her Majesty's Government pressed successfully for the inclusion in the EU Tax Code of Conduct, and the Annex attached to the EU draft directive on the taxation of savings, of the phrase within the framework of their constitutional arrangements' when reference is made to the possible application to the dependent territories of Member States of the principles incorporated in the Code.
I n th e view of the Policy and Resources Committee the constitutional position of the Island and its autonomy in matters of taxation is firmly in place and is unaffected by the OECD or EU proposals.
T h e I nsular Authorities in responding to any requests for information on so-called harmful tax measures
will have regard for the position being adopted by other non-EU countries. In the view of the Committee there must be a level playing field and, as the United Kingdom Government has done in its recent response to EU tax harmonisation, it must be made clear that no action will be taken by the Insular Authorities that would damage the Island's economy and simply encourage the transfer of business to less well regulated centres.
T h e Committee is of the view that the position in respect of the EU remains as described by the Hon.
Geoffrey Rippon M.P. in November 1971 when he spoke in this Chamber about the outcome of the negotiations for the entry of the United Kingdom into the European Community, and stated –
U n d e r th e proposals your fiscal autonomy has been guaranteed – I say that deliberately and slowly. There is no doubt whatever about that and I can say quite categorically that there will be no question of your having to apply a value added tax or any part of Community policy on taxation'.
T h e Insular Authorities have made strong representations to the OECD in response to their decision to
draw up a provisional list of tax havens which included the Island. The OECD are currently engaged in evaluating the Island's submission and it has been indicated to the Insular Authorities that they will have an opportunity to make further representations in due course.
T h e I nsular Authorities are convinced that they can satisfy the OECD that the key factors used to identify
a tax haven, as set out in their Report on Harmful Tax Competition, do not apply to Jersey for the following reasons –
(a ) J ersey does not generally impose no or only nominal taxation. The standard rate of tax of 20 per cent
has remained unchanged since 1940 and provides 90 per cent of the Island's tax revenues;
(b ) the Island does not have a bank secrecy law. The Island also has legislation already enacted or in
immediate prospect that is more extensive than the legislation of may OECD member countries in providing for the effective exchange of information on those engaged in crime;
(c ) there is no lack of transparency in the operation of the Island's legislative, legal or administrative
provisions. This statement has been reinforced by the Edwards review of financial regulation in the Island;
(d ) t he major part of the business activities in the Island are of a substantial nature.
T h e C ommittee is of the view that Jersey can be equated to Switzerland and Luxembourg neither of whom
are on the provisional list of tax havens and both of whom abstained from adopting the OECD report on the grounds that by limiting itself to financial activities the report adopts a partial and unbalanced approach.
T h e Insular Authorities recognise that there has been a change in the international climate towards an
increased determination to tackle harmful' tax competition, and that in due course the Island in common with the world at large will be called upon to respond to this change of climate. However, before so responding the Insular Authorities will require proper and full regard to be had for a level playing field internationally with no differences in interpretation from one country to another. At all times they will act to safeguard the economic well being of Island residents, recognising the damage that could be caused to the Island's economy if there is inconsistency in the action taken by all countries and in particular by the Island's main competitors in the provision of financial services.
I will keep the House informed as these important matters develop." Ajournment
THE STATES then adjourned having agreed to defer consideration of the proposition regarding Electoral law reform (P.207/98 – lodged "au Greffe" on 6th October 1998).
THE STATES rose at 5.25 p.m.
C.M. NEWCOMBE Deputy Greffier of the States.