States Minutes 30th March 2004

THE STATES assembled on Tuesday, 30th March 2004 at 9.30 a.m. under the Presidency of the Bailiff ,

Sir Philip Bailhache .

His Excellency the Lieutenant Governor,

Air Chief Marshal Sir John Cheshire, K.B.E., C.B., was present.

All members were present with the exception of –

S e nator Frank Harris on Walker – ill

S e nator Edward Philip Vibert – out of the Island

P h ilip Francis Ozouf , Connétable of St. Saviour – out of the Island J a cqueline Jeannette Huet, Deputy of St. Helier – out of the Island C e lia Joyce Scott Warr en, Deputy of St. Saviour – ill.

Prayers Newly-elected Senator Richard Joseph Shenton O.B.E. – welcome

The Bailiff , on behalf of all members, welcomed newly-elected Senator Richard Joseph Shenton, O.B.E. to the Assembly.

Subordinate legislation tabled

The following enactments were laid before the States, namely –

Royal Court (Remuneration of Commissioners) (Jersey) Order 2004. R&O 21/2004. Court of Appeal (Remuneration of Ordinary Judges) (Jersey) Order 2004. R&O 22/2004.

Matters presented

The following matters were presented to the States –

Public  Records  (Jersey)  Law  2002:  report  on  the  application  of  the  Law R.C.13/2004. during  2003.

Presented by the Education, Sport and Culture Committee.

General Reserve: grant of additional funds to 31st December 2003. R.C.14/2004. Presented by the Finance and Economics Committee.

Machinery of Government: votes of no confidence in individual ministers P.6/2004. (P.6/2004) – comments. Com. Presented by the Privileges and Procedures Committee.

States Members' Remuneration: increases for 2004 – rescindment (P.11/2004) – P.11/2004. comments. Com. Presented by the Privileges and Procedures Committee.

The following matter was presented on 23rd March 2004 –

Youth Custody for persons aged 12 and over (P.2/2004): comments. P.2/2004. Presented by the Finance and Economics Committee. Com.(2)

THE STATES ordered that the said reports be printed and distributed. Matters noted – land transactions

THE STATES noted an Act of the Finance and Economics Committee dated 15th March 2004, showing that, in pursuance of Standing Orders relating to certain transactions in land, the Committee had approved –

( a ) as recommended by the Environment and Public Services Committee, the sale to Mr. James William

Wesley Harris on of an area of land (measuring 105  square metres) to the west of No.  9 Vue des Mielles La Route des Quennevais, St. Brelade, for a consideration of £2,735, and subject to a number of restrictive covenants, on the basis that the purchaser would be responsible for both parties' reasonable legal costs arising from the transaction;

( b ) as recommended by the Policy and Resources Committee, the lease to the Jersey Electricity Company

Limited of an area of land (measuring 160  square metres – required for an electricity sub-station) on the St. Helier Waterfront (within the West of Albert car park – as designated on Drawing No.  53547) for a period of 99 years at an annual rent of £1 payable in one lump sum upon the passing of the contract, on the usual terms and conditions, with the Jersey Electricity Company Limited to be responsible for both parties' reasonable legal fees arising from the transaction;

( c ) as recommended by the Housing Committee, the lease to the Jersey Electricity Company Limited of an

area  of  land  (required  for  the  provision  of  an  electricity  Section  Pillar)  at  Princess  Place,  Grève d'Azette, St. Clement , for a period of 99 years for a one-off payment of £20, on the basis that each party would be responsible for its own legal costs arising from the transaction, and with the Jersey Electricity Company Limited to meet the cost of the works associated with the provision of the Section Pillar;

( d ) as recommended by the Housing Committee, the lease to the Jersey New Waterworks Company Limited

of areas of land (being the sites of an Air Vessel Chamber and a Booster Station – shown on Drawing No.  3798/169A and 751 respectively) at Oak Tree Gardens, St. Helier , for a period of 99 years for a consideration  of £99  payable  at  the  commencement  of  the  lease,  on  the  basis  that  the  Housing Committee would require access rights for maintenance of the retaining wall surrounding the Air Vessel Chamber, and with each party to be responsible for its own legal costs arising from the transaction;

( e ) as recommended by the Health and Social Services Committee, the renewal of the lease to Mr. Anthony

William Paine and Mrs. Vida Anne Paine, née Combes, of No.  3 The Denes, St. Clement (a three- bedroom property) for a period of three years from 1st December 2002, at an initial annual rent of £8,500, subject to annual rent reviews in line with the Jersey Retail Price Index, on the basis that each party would be responsible for its own legal costs arising from the transaction;

( f ) as recommended by the Health and Social Services Committee, the renewal of the lease from Arradon

Holdings Limited of the property No.  14 Byron Road, St. Helier (measuring 1,337  square feet plus 14 car parking spaces – required for use by the Department of Clinical Psychology), for a period of three years from 1st March 2003, at an initial annual rent of £34,625, subject to annual rent reviews in line with the Jersey Retail Price Index, on the basis that each party would be responsible for its own legal costs arising from the transaction;

( g ) as recommended by the Health and Social Services Committee, the lease to Mrs. Christina McLallen

Gillen, née McAllister, of the property known as 52 Don Street, St. Helier, for a period of three years from 1st January 2003, at a commencing annual rent of £8,500 subject to annual review in line with the Jersey Retail Price Index, on the basis that the rent reflected an option to remove part of the rear storeroom and toilet at the property some time in the future in order to make way for the redevelopment of No.  12 Burrard Street, St. Helier , and with each party to be responsible for its own legal costs arising from the transaction;

( h ) as recommended by the Environment and Public Services Committee, the renewal of the lease to Mr.

Peter Gibbons and Mrs. Ann Huelin, née Gibbons, of the property known as Le Braye Café, Le Braye Slip, St. Brelade, for a period of six years from 25th December 2003, at a commencing annual rent of £18,000 subject to review on the third anniversary of the lease in line with the Jersey Retail Price Index, on the basis that all other terms and conditions would remain the same as the existing agreement, and with each party to be responsible for its own legal costs arising from the transaction;

( i)  as recommended by the Environment and Public Services Committee –

(i )  th e entering into of a Deed of Arrangement with Mrs. Carol Anne Walker , née Horne, of Rosedale

Farm, Le Mont Cochon, St. Helier, in respect of the incorporation of a strip of land (measuring 571 square feet – shown on Drawing No.  15/731/1-01) required for the establishment in perpetuity of a road stabilisation structure and a new hoggin public footpath to improve pedestrian safety along the eastern side of Le Chemins des Moulins (Waterworks Valley), St. Helier (as shown on Drawing No.  982-005), for a consideration of £600, on the basis of terms set out in a report dated 26th February 2004, of the Director of Property Services, and with the Committee being responsible for both parties' legal costs arising from the transaction; and,

(i i) th e entering into of a Deed of Arrangement with Mrs. Drusilla Mary Burdon, née Herbert, of White

Lodge, Le Chemins des Moulins, St. Helier, in respect of the purchase of a strip of land (measuring 5,167  square  feet – shown  on  Drawing  No.  15/731/1-01)  required  for  the  establishment  in perpetuity of a road stabilisation structure and a new hoggin public footpath to improve pedestrian safety along the eastern side of Le Chemins des Moulins (Waterworks Valley), St. Helier (as shown on Drawing No. 982-003), for a sum of £5,200, on the basis of terms set out in a report dated 26th February 2004, of the Director of Property Services, and with the Committee being responsible for both parties' legal costs arising from the transaction;

 ( j )  as recommended by the Health and Social Services Committee, the lease from Mrs. Thelma May

Durbano, née Guillou, of the property known as Admar, No.  12 Maudelaine Estate, La Route Orange, St. Brelade (required for the establishment of a group home) for a period of eight years from 1st October 2003, at an annual rent of £29,900 subject to rent reviews on the third and sixth anniversaries of the lease in line with the Jersey Retail Price Index, and on the basis that each party would be responsible for its own legal costs arising from the transaction.

Matters lodged

The following matters were lodged "au Greffe" –

States Members' Remuneration: increases for 2004 – rescindment (P.11/2004) – P.11/2004. Amd. second amendment. (2) Presented by Senator R.J. Shenton.

Residential and business parking scheme, Stopford Road area, St. Helier: fees. P.47/2004. Presented by Deputy G.P. Southern of St. Helier , and referred to the Environment

and Public Services Committee.

Fields 1282 and 1287, La Fredée Lane, St.  Helier: extinguishment of restrictive P.48/2004.

covenants.

Presented by the Environment and Public Services Committee.

Former School, Clearview Street, St.  Helier: proposed sale. P.49/2004. Presented by the Environment and Public Services Committee.

Draft Milk (Sale to Special Classes) (Jersey) Regulations 200-. P.50/2004. Presented by the Employment and Social Security Committee.

The following matters were lodged on 23rd March 2004 –

Draft Competition (Jersey) Law 200- (P.37/2004): amendment. P.37/2004. Presented by Deputy J.L. Dorey of St. Helier . Amd.

Draft Prison (Amendment No. 5) (Jersey) Law 200-. P.45/2004. Presented by the Home Affairs Committee.

Draft Shipping (Registration) (Jersey) Regulations 200-. P.46/2004. Presented by the Harbours and Airport Committee.

Code of Practice on Public Access to Official Information: Register of Reports – P.196/2003 – withdrawn.

THE STATES noted that, in accordance with Standing Order 22(3), Deputy Peter Nicholas Troy of St. Brelade had instructed the Greffier of the States to withdraw the proposition regarding a Code of Practice on Public Access to Official Information: Register of Reports', (P.196/2003 lodged "au Greffe" on 23rd December 2003).

Draft Public Elections (Jersey) Law 2002 (Appointed Day) (No.  2) Act 200-, P.43/2004 – withdrawn.

THE STATES granted leave to the President of the Legislation Committee to withdraw the draft Public Elections (Jersey) Law 2002 (Appointed Day) (No.  2) Act 200-, (P.43/2004 lodged "au Greffe" on 16th March 2004), and set down for consideration at the present meeting.

Draft Public Elections (Amendment) (Jersey) Regulations 200-, P.44/2004 – withdrawn.

THE STATES granted leave to the President of the Legislation Committee to withdraw the draft Public Elections (Amendment) (Jersey) Regulations 200-, (P.44/2004 lodged "au Greffe" on 16th March 2004), and set down for consideration at the present meeting.

Arrangement of public business for the next meeting on 20th April 2004

THE STATES confirmed that the following matters lodged "au Greffe" would be considered at the next meeting on 20th April 2004 –

Public right of access to information, financial and other records of the States of P.34/2003. Jersey.

Lodged: 1st April 2003.

Deputy A. Breckon of St. Saviour .

Public right of access to information, financial and other records of the States of P.34/2003. Jersey (P.34/2003): comments. Com. Presented: 3rd June 2003.

Employment and Social Security Committee.

Public right of access to information, financial and other records of the States of P.34/2003. Jersey (P.34/2003): comments. Com.(2) Presented: 19th August 2003.

Privileges and Procedures Committee.

Public right of access to information, financial and other records of the States of P.34/2003. Jersey (P.34/2003): comments. Com.(3) Presented: 14th October 2003.

Policy and Resources Committee.

Public right of access to information, financial and other records of the States of P.34/2003. Jersey (P.34/2003): comments. Com.(4) Presented: 10th February 2004.

Finance and Economics Committee.

Youth Custody for persons aged 12 and over. P.2/2004. Lodged: 20th January 2004.

Deputy of St. Martin.

Youth Custody for persons aged 12 and over (P.2/2004): comments. P.2/2004. Presented: 2nd March 2004. Com. Home Affairs Committee.

Youth Custody for persons aged 12 and over (P.2/2004): comments. P.2/2004. Presented: 23rd March 2004. Com.(2) Finance and Economics Committee.

Draft Shipping (Local Small Ships Registration) (Jersey) Regulations 200-. P.42/2004. Lodged: 16th March 2004.

Harbours and Airport Committee.

Draft Shipping (Registration) (Jersey) Regulations 200-. P.46/2004. Lodged: 23rd March 2004.

Harbours and Airport Committee.

Residential and business parking scheme, Stopford Road area, St. Helier: fees. P.47/2004. Lodged: 30th March 2004.

Deputy G.P. Southern of St. Helier.

Spending on the Methadone programme – question and answer (Tape No. 905)

Deputy Jeremy Laurence Dorey of St. Helier asked Senator Stuart Syvret, President of the Health and Social Services Committee the following question –

"W ould the President inform the Assembly why it is intended to reduce spending on the methadone

programme from £205,000 in 2005, to £153,390 in 2006, and to £115,000 in 2007?"

The President of the Health and Social Services Committee replied as follows –

" I t is not intended to reduce spending on the methadone programme over the period described.

T h e addition of an alternative drug, Subutex, to the treatment programme may have caused some confusion in

the recent States debate of the Safer Society Strategy. The Strategy perhaps should have referred to the treatment programme rather than the Methadone Programme because the programme now incorporates both Methadone and Subutex as treatment options; Subutex being used for addicts who for clinical reasons cannot respond to Methadone as the substitute drug of withdrawal.

A  s members will recall Objective 5 of Strategic Priority 3 of the Building a Safer Society Strategy is to

continually review evidence based interventions in order to extend the range and availability of options for problematic drug users'. The initiatives described below the objective refer to both a Methadone Programme and a Subutex Programme. Both are drugs used to help addicts to withdraw from the use of heroin.

M  ethadone is presently the main drug used on the treatment programme but Subutex is now being trialled as

an alternative for those heroin addicts for whom methadone is not a suitable means of withdrawal.

 I n fact, the Methadone element of the treatment programme increases slightly during the three years in

question, with £105,000 inscribed for 2005, £110,000 for 2006 and £115,000 for 2007. What may have confused members is the addition of funding for Subutex in 2005 and 2006 of £100,000 and £43,000 respectively. This will allow the trials of Subutex in the treatment programme to be concluded. If, as anticipated, Subutex proves to be an effective substitute to methadone for some heroin addicts seeking treatment, then recurring funding for the new drug will be sought as part of the Health and Social Services Committee's revenue budget for 2007 and beyond."

Disposal of agricultural polythene – question and answer (Tape No. 905)

The Deputy of St. John asked Deputy Francis Gerald Voisin of St. Lawrence, President of the Economic Development Committee, the following question –

" W ould the President inform members what action, if any, the Committee is taking to ensure the appropriate disposal of all discarded agricultural polythene in the Island?"

The President of the Economic Development Committee replied as follows –

" S ince 2003, any grower wishing to receive Area Payments has to complete a declaration. Section 4 of the declaration is as follows –

t h a t I /we agree to dispose of any plastic film used to grow crops on the land I/we farm in 2003 in a

method specified by the Department and I/we agree to pay the disposal charge of £188 per tonne of material for

disposal.'

 O  f the 150 registered growers, 88 signed the above mentioned declaration and therefore received Area

Payments.

T h ose growers that grew potatoes under plastic in 2003 had to complete a further declaration giving details of

plastic film to be disposed of in 2003, to be retained for further use and to be temporarily stored including the place of storage. The information contained within this declaration was checked against disposal records held by Public Services Department and a random physical check was carried out.

T h e same procedure will be carried out in 2004; this ensures that only those willing to commit to appropriate

disposal of their plastic receive Area Payments."

Transport Fund – question and answer (Tape No. 905)

Deputy Gerard Clifford Lemmens Baudains of St. Clement asked Senator Philip Francis Cyril Ozouf , President of the Environment and Public Services Committee, the following question –

" W ould the President inform members whether, in November 2002, the Committee requested the Finance and Economics Committee to sanction the transfer of £250,000 from the Car Park Trading Fund to the Transport Fund from which £50,000 was allocated to collecting baseline data, £50,000 for safe routes to schools and £50,000 for bus travellers information, and, if so, whether these funds have been spent, and, if so, how?"

The President of the Environment and Public Services Committee replied as follows –

" I n late 2002, the Finance and Economics Committee approved the use of £250,000 from the Car Park Trading Fund to pump prime' transport fund initiatives. On the recommendations of the Sustainable Island Transport Steering Group, in November 2002, the then Public Services Committee decided that these funds should be allocated as follows: –

£1 0 0 ,0 00 to boost the programme of road safety improvements;

£5 0 ,0 0 0 for a pilot "safe routes to schools" project;

£5 0 ,0 0 0 for a real time information system at bus shelters along a chosen route; and,

£5 0 ,0 0 0 to improve the automatic traffic monitoring system to enable the effect of traffic policies to be monitored.

P r ogress for each issue is as follows: –

I m p r o ved pedestrian facilities are being designed at a number of locations including West Park, at

Midvale Road/Rouge Bouillon junction, on Longueville Road, on St. Aubin's Inner Road in St. Lawrence, and on Rue Le Masurier, with implementation programmed for 2004.

F o ll o w ing a selection process, a Safe routes to school' pilot scheme has been designed at St. Martin's

Primary school and details are being discussed with all interested parties, before finalising the plans.

P o t e n tial real time information systems for a chosen bus route have been identified which will be

implemented when the design of the proposed Transportation Centre is finalised, as this will have a bearing on the information system to be introduced.

A q u o tation for the supply and installation of a comprehensive automatic counting system has been

obtained, but requires modification to fall within the budget."

A hoppa' bus service and resident's parking scheme – questions and answers (Tape No. 905) Deputy Geoffrey Peter Southern of St. Helier asked Senator Philip Francis Cyril Ozouf , President of the Environment and Public Services Committee the following questions –

" 1 . Would the President inform members whether the Committee is committed to the provision of a town hoppa' bus service as part of a proposed hop-on/hop-off' tourist service, or as a separate service?

2 . W ould the President inform members of the Committee's intentions regarding the imminent expiration

of the residential parking scheme for those living in the Stopford Road area of St. Helier on 4th May 2004, and whether a reasonably priced replacement scheme will be introduced in early course to allow full consultation with residents of the area concerned?"

The President of the Environment and Public Services Committee replied as follows –

" 1 . There is a significant difference between the visitor service and the hoppa' service. If operated in a similar manner to the experiment in 1999, a hoppa' service would require a subsidy in excess of £300,000 per year to operate. The Committee has a number of fundamental issues to tackle with the bus service and has a duty to ensure the Island is getting the best out of the current contract with Connex before committing the States to any further expenditure.

2 .  T he Committee has not yet formally considered this matter but will do so at its meeting on 8th April

2004. Since assuming the Presidency, I have had discussions with  the  department  concerning the residential parking scheme. Last week I wrote to all permit holders to seek their views ahead of the meeting on 8th April. What I can say today is that the Residential and Business Parking Scheme is a permanent scheme and is not due to expire, as inferred by the Deputy . Most permits will be due for renewal on or about 4th May 2004. The previous Committee had set a fee of £150 for a six month period. The current Committee will consider what fee to charge for the next six month period on 8th April 2004."

The proposed construction of a warehouse at the Harbour – question and answer (Tape No. 905)

The Deputy of St. John asked Senator Leonard Norman, President of the Harbours and Airport Committee the following question –

" W ith regard to the recent notice seeking expressions of interest for the proposed third phase warehousing development at the Harbour, would the President inform members –

( a ) whether negotiations on the use of the proposed development have taken place with the agricultural

industry?

(b ) whether discussions with the Parish of St. Helier have taken place regarding possible traffic

implications? and,

( c ) whether this project will be supported by States funding, and, if so, whether the Committee will bring the

matter to the States for debate given the apparent number of empty agricultural sheds and buildings already in the Island?"

The President of the Harbours and Airport Committee replied as follows –

" ( a) Informal discussions have taken place with representatives of the agricultural industry on the use of the proposed development, but no negotiations.

( b ) No, not as yet.

( c ) It is not expected that this project would involve States funding."

Finance and Economics Committee's proposed new tax reforms – questions and answers (Tape No. 905)

Deputy Geoffrey Peter Southern of St. Helier asked Senator Terence Augustine Le Sueur, President of the Finance and Economics Committee the following questions –

" 1 . In answer to my question of 16th March 2004, regarding the proposed new tax reforms, the President gave a maximum figure for additional tax payable under his proposed reductions in allowances of £5,720 for a couple with 2 children earning £150,000 and having a mortgage of £300,000. Will the President inform members by how much this figure will be raised if –

( a )  t he children were in higher education? ( b )  t he wife/spouse was working? and,

( c ) e ither partner was paying additional voluntary contributions (AVCs) to top up a States pension, or was paying contributions into a private pension fund of, say, £10,000 per annum?

2 . W  ould the President inform members whether the Committee intends to introduce any tax avoidance

measure such as or similar to that introduced in the United Kingdom, whereby all those offering tax- planning schemes involving payments to employees or financial products are required to seek the approval of the Inland Revenue by registration of any scheme prior to offering it to the public as failure to do so would render the selling of any such scheme illegal?

3 . W ith regard to answers given by the President in reply to questions asked by Senator P.V.F. Le Claire on

16th March 2004, regarding a new fiscal policy, would the President inform members –

(a ) w hy provision is made for exempt companies to pay 20% tax on income arising in Jersey when the

information available suggests that their tax contribution is no more than the exempt company charge of £600;

 ( b )  h ow many International Business Companies (IBCs) pay tax at rates of 2% and under, and how

much income this has generated in 2003? and,

( c ) H ow many IBCs paid tax in 2003 at the rates between 2% and 30% on income or profits other than

those arising from international activities, and how much revenue this produced?

4 . W ould the President provide details to members of what proportion of the possible £100 million of lost

revenue produced by the Committee's zero/ten proposals will come from each of the following sectors?

In t e rnational business companies

E x e mpt companies

F i n a n c ia l administration companies associated with the above N o n -finance businesses – locally owned

N o n -f in a nce businesses – not locally owned.

5 . W ith regard to the Committee's plan to raise revenue by £100 million, which includes an increase in the

Island's economic output of 2% resulting in raising £20 million in extra tax, would the President inform members –

( a ) w hether this would mean an actual increase of 6% in economic growth if the current rate of

inflation remains the same as this year?

( b ) w hether an increase in economic growth of this magnitude can only be achieved by creating more

jobs and thus putting more money into circulation? and,

( c ) w hether the addition of a sales tax on top of proposed economic growth of this magnitude could

cause double digit inflation?"

The President of the Finance and Economics Committee replied as follows –

" 1 . The figure of £5,720 would be raised as follows –

(a ) i f full child allowance were given for both children in higher education, by another £1,000; (b ) i f the wife was working and earning at least £4,500, by another £900;

(c ) t here would be no increase in the couple's tax bill as pension contributions to an approved scheme

will continue to be allowed as a deduction from assessable earnings.

D e p u ty Southern 's example demonstrates the merits of the Finance and Economics Committee's

proposals to phase out tax allowances and reliefs for those on high incomes. The current very generous level of tax allowances for those on high incomes means that, in Deputy Southern 's example, the couple earning £150,000 making pension contributions of 5% would pay tax of £20,880. This is an effective rate of tax of 13.9%. Under the Committee's proposals, the tax paid would rise to £28,500, which is an effective rate of tax of 19%.

2 . T he Income Tax Law has had, for many years, a general anti-avoidance provision at Article 134A,

which has proved useful in tackling tax avoidance in Jersey. For example, in the last 6 months alone, the Comptroller of Income Tax has ruled in 154 cases where a degree of tax avoidance was involved. It is, however, likely that the introduction of a measure similar to the one proposed in the United Kingdom would prove useful in further reducing tax avoidance in Jersey, so the Committee awaits, with interest, the detailed draft legislation that will be published in the U.K. Finance Bill 2004. It may well be that the Committee shall propose amendments to Article 134A, or perhaps introduce new legislation to make it a condition that any person who engages in any scheme or structure to avoid Jersey income tax must declare such a scheme to the Comptroller of Income Tax, who will have the power to counteract any schemes that entail the avoidance of Jersey income tax. However, as with so many matters to do with tax, there are potential difficulties, as experience internationally has shown that such draconian arrangements can get bogged down in legal challenges. It may also impact on what taxpayers would regard as legitimate commercial activity aimed at, for example, making them more competitive. Such a system would also inhibit the current constructive and reasonable working relationship that the Comptroller has with taxpayers and professionals. If the Committee does decide to proceed with such a measure, the time to do so may well be in conjunction with the proposed look through' arrangements to tax corporate profits on Jersey resident shareholders, as these provisions will have to be very tightly drawn to ensure that there in no leakage of tax revenues through avoidance schemes being put in place by taxpayers and professional advisers.

3 .  ( a)  T he Income Tax Law provides that, if certain conditions are met, an exempt company shall be

treated for all purposes as not resident in the Island. Being treated as not resident means that the exempt company is exempt from Jersey income tax on income arising outside Jersey and on bank and building society interest arising in the Island, (in accordance with the usual concession). However, other income arising in Jersey, such as rental income, and profits arising in Jersey through an established place of business, are liable to Jersey income tax at the standard rate of 20%. As exempt companies are exclusively used by non residents of Jersey, virtually all of their activities and income arise outside Jersey, but provision had to be made in the Law to ensure that those exempt companies that do receive any Jersey source income pay tax on it at the standard rate of 20%.

( b ) I t is impossible to answer this question accurately in the time available as the Comptroller of Income Tax has to undertake a detailed examination of the manual records relating to some 100

international business companies. The Comptroller has now started such an examination and it is

anticipated that, if the Deputy contacts the Comptroller after the end of next week, he will have the information

that the Deputy seeks.

( c) I t is impossible to answer this question accurately for the same reason as given at (b), but it is

anticipated that this information will also be available for the Deputy at the end of next week.

4 . T he loss of some £100 million in tax revenues is a worse case scenario and it can be broadly categorised

as coming from the following areas –

I n te r n a t ional business companies – 10%. Many of the international business companies who pay

substantial tax revenues are already close to an effective rate of tax of 10% so the majority of that business should stay once the proposed 10% rate is introduced, but a few may go.

E x e m p t companies – 10%. This relates to the loss of the exempt company fee of some £10 million

as they will all be categorised as zero rate. However, it should be possible, subject to international competitive pressures, to recoup this loss through, for example, increasing the annual filing fee.

F i n a n c ia l administration companies associated with the above –

 I t i s n o t p o s s ib l e to give a percentage loss to this kind of business as it is not known which,

if any, financial administration companies deal solely with international business and exempt companies. The percentage figure is not expected to be significant.

N o n -f i n ance business – locally owned and not locally owned. In broad terms, some 40% of the

potential loss relates to non-finance business. Of that, I estimate some 20% to 30% relates to non- finance business trading locally whose shareholder base is outside the Island. The balance relates to locally owned businesses. It will, of course, be possible to claw back some of the tax lost through levying a zero corporate rate on locally owned companies by taxing the Jersey resident shareholders of such a company on the actual company profits under look through' arrangements. We are also pursuing ways of recovering some or all of the tax attributable to non- resident shareholders.

T h e m  ajority of the loss, perhaps 50%, is estimated to come from the income tax companies involved in

the finance industry currently paying at an effective rate of tax close to the standard rate of 20% which will fall to be taxed at 10% under the Committee's proposals. Again, some, but by no means all of these, are locally owned.

5 . (a )   I n theory, economic growth should be measured against an indicator such as GNI, (Gross

National Income). In this instance, the Committee is using the Retail Price Index as the yardstick, and on that basis the 2% real increase in output would equate to 6% in cash terms given the current R.P.I. of 4%.

(b ) I t is conceivable that such a rate of growth could be achieved without creating more jobs and by

simply improving productivity and/or increasing investment in the economy. However, realistically if such growth is to be sustained it should lead to higher employment levels on the island, and therefore inward migration, (given the prevailing low level of unemployment). Higher growth should also generally mean more transactions in the economy and an increase in the circulation of money, although this does not necessarily mean higher inflation.

(c ) T he imposition of a Sales Tax or other form of Goods and Services Tax, (GST), will have two opposing impacts on inflation. Firstly, it will constrain or reduce inflation by reducing aggregate

demand in the economy. Without the GST, (or another tax increase of similar magnitude to replace it), the government deficit will be higher, adding greater stimulus to the economy and therefore adding to inflationary pressure. Secondly, to the extent that the GST will increase retail prices it will in the short term add to inflation. This impact can be reduced if it is prevented from feeding through into higher wage demands and prices elsewhere in the economy. This can be

achieved by breaking the link between RPI and wage demands, managing inflation expectations and increasing

competition across the economy. Under such circumstances the introduction of a GST should have a largely one-off impact on inflation. Even allowing for economic growth, I would be amazed if the proposed rate for a Goods and Services Tax of 5% caused anything like double digit inflation."

Draft Code of Conduct for elected members of the States – statement

Deputy Roy George Le Hérissier of St. Saviour , President of the Privileges and Procedures Committee made a statement in the following terms –

" On 29th April 2003, the States adopted a proposition of the Privileges and Procedures Committee

concerning the introduction of a Code of Conduct for Elected Members of the States and in doing so approved the draft Code attached to the proposition.

A  t the time of the debate it was made clear that the draft Code, and in particular the complaints procedure,

could not be given full effect until its provisions were incorporated into the revised Standing Orders that are being prepared as part of the machinery of government reforms. Paragraph 3.1 of the report accompanying the proposition was in the following terms –

3 .1       I t will be necessary for appropriate amendments to be made to the Standing Orders of the States to

give effect to the Code. The Privileges and Procedures Committee intends to bring forward those amendments as part of its overall review of the Standing Orders. In the interim it is hoped that Members will regard the Code as a helpful guide to conduct albeit, at this stage, an informal one.

 S  ince April 2003, a small number of complaints have been submitted to the Privileges and Procedures

Committee alleging breaches of the draft Code. After seeking the advice of the Law Officers the Committee has had to make it clear to complainants that the Code remains, as mentioned above, an informal one at this stage and the Committee has been unable to take any formal action in respect of these complaints. The Committee accepts that this situation is somewhat unsatisfactory but to avoid any further misunderstandings I am making this statement to clarify the position. The Committee is beginning work on the revised Standing Orders and this work will continue throughout 2004 so that they will be in place to coincide with the introduction of the new system of government in 2005.

A  lthough the draft Code cannot yet be fully enforced, the Committee wishes to make it clear that it remains

fully committed to promoting the principles contained in the Code which, as said at the time of the debate, are in fact nothing more than the normal standards of behaviour that should be expected from elected members at all times. I trust that all members share this view and will continue to do all they can to abide by the Code's provisions at all times."

Working Party on the Arrangement of Public Business – statement

Deputy R.G. Le Hérissier of St. Saviour, President of the Privileges and Procedures Committee made a statement in the following terms –

" I  am making this statement to update members on the progress being made by the Working Party on the Arrangement of Public Business.

T  he Working Party was originally established by the Privileges and Procedures Committee as previously

constituted but was only able to meet once before the change of Committee in February. The Working Party was reconstituted under the chairmanship of Deputy Peter Troy at the first meeting of the new Privileges and Procedures Committee and I am pleased to inform members that the group held its first meeting yesterday. The other members of Working Party are –

th e B a iliff;

th e C o nnétable of St. Clement representing the PPC;

D e p u ty M.F. Dubras representing the Policy and Resources Committee; S e n at o r L. Norman representing the Economic Development Committee; S e n at o r E.P. Vibert ;

th e C o nnétable of St. Peter;

D e p u ty G.C.L. Baudains;

D e p u ty J.L. Dorey.

T h e terms of reference of the Working Party are –

t o r e view the management of public business in the States Assembly and to bring forward

recommendations for change with a view to ensuring that public business is dispatched in a timely and efficient manner and that improved liaison exists between the Greffier of the States and Committees as to the future legislation programme;

t o e x a mine the advantages and disadvantages of setting up a Business Committee, or Parliamentary

Bureau', to be responsible for the regular forward planning of public business, and if considered appropriate, to bring forward recommendations for the establishment of a Parliamentary Bureau for Jersey; and

to re v i ew current procedures relating to question time and to bring forward recommendations to improve

the current system whilst safeguarding the proper place of questions in the Assembly.

T  he Privileges and Procedures Committee is conscious that many members have expressed the view that

changes are needed in the manner in which we currently organise questions and public business in this Assembly but the Committee is also aware that members hold widely differing views on the nature of the changes that could be made. I would like to stress that the Committee recognises that the rights of private members to table questions and bring forward propositions must be preserved but this right may need to be balanced by the requirement to ensure that business is conducted in an orderly and timely manner. In addition the establishment of the two Shadow Scrutiny Panels has created a new structure for members to hold Committees to account and this may enable changes to be made in other procedures.

A  t the meeting held yesterday the Working Party decided that it would aim to conclude its work and report to

the Privileges and Procedures Committee by 20th April 2004. The meeting discussed present procedures for fixing dates for debate and agreed that efforts should be made to improve the present uncertainty caused by the fact that some items remain on the no dates fixed' list for considerable periods. The Working Party agreed to request the Greffier of the States to ensure that all members comply with the provisions of Standing Order 18(3) which requires members to indicate the requested date for debate when giving notice of a proposition. The Working Party also intends to recommend steps to reduce the time being taken by some Committees to present comments on propositions lodged by private members.

T h e Working Party discussed present procedures relating to question time. The Working Party believes it is

essential to preserve the right of all members to table questions and hold Presidents to account but is also conscious of the views expressed by many members that the present procedures on questions are in need of reform. At yesterday's meeting the Working Party agreed that a system of separate oral and written questions should be developed and intends to recommend that this system be trialled for a period of three to four months.

T he final decision taken yesterday was that members should agree to reduce the length of the lunch