What does corporate tax per capita mean in economics and what evidence is there that it is higher here than elsewhere

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WRITTEN QUESTION TO THE MINISTER FOR TREASURY AND RESOURCES BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 20th APRIL 2010

Question

"In a speech on 17th March to the Chamber of Commerce, the Minister said -

"Even after 0/10, much higher levels of corporate tax are paid per capita here than in virtually any place in the world – including other Crown Dependencies."

1. C an the Minister explain what "corporate tax per capita" means in economicsand in whatway is itrelevant criterion for comparisonwithothereconomies?
2. W  hatevidence does he have to supporthis statement that "corporate tax per capita" is higher here than elsewhere?
3. D oes the Minister accept that a more valid comparison of corporate tax between jurisdictions is the percentage of profits paid as tax?
4. C ould the Minister confirm that, on 2007 figures, corporate income tax stood at £196mand net profit in the Finance Sector was £1,460m, giving a maximum tax rate for businessof13.4%?
5. G iven that these figures relate to a tax rateof20%, will the Minister give estimatesof tax revenue in real and percentage terms from the finance andnon-finance sectors under0/10for2010?
6. W  ill the Minister publish a comparisonof corporate tax take as a percentage of profit with appropriate jurisdictions including otheroffshorecentres?"

Answer

1. Corporate tax per capita is the corporate tax revenue received by the government divided by the population to give an idea of the scaleofcorporate tax revenue per person.  It is a relevantcomparison because it isone way ofmeasuringthelevel of public funds derived from corporate tax and therefore the amountwhichhasto be made upthroughother sources – largely personaltaxes – to achieve a certainlevelof revenue per head to fund public expenditure.
2. The table below summarises the evidencewhich supports the statement and shows corporate tax per head for a range of countries and that Jersey is third highest (andhigher than theotherCrownDependencies).

Corporate tax per head, 2008

Jurisdiction £ at PPP

1. Norway £4,682
2. Luxembourg £3,066
3. Jersey £1,580 **
4. Guernsey £923 *
5. Japan £906
6. Switzerland £889
7. Canada £887

8. United Kingdom £837
9. Denmark £833
10. Finland £825
11. Sweden £797
12. Belgium £782
13. Korea £777
14. Italy £764
15. Ireland £750
16. United States £746
17. Czech Republic £738
18. UK £712 *
19. New Zealand £692
20. France £639
21. Austria £617
22. Portugal £580
23. Spain £570
24. Iceland £497
25. Slovak Republic £446
26. Germany £442
27. Hungary £344
28. Isle of Man £308
29. Turkey £162 *

* Figures for 2009

** Figure for 2009, adjusted for zero/ten

Source: OECD, national Budget documents

3. No the Minister does not accept that a morevalidcomparisonofcorporate tax between jurisdictions is the percentage of profits paid by tax.  Jersey isan offshore centre operatingin a very competitive worldand must keep its corporate tax rates competitive relative tootheroffshore centres and corporate tax ratesinother larger economies that arenotoffshore centres donot provide a useful comparison. Corporate tax per head gives a better  indication  to  Islanders of  the  extent we all benefit  from  being an offshore centre,  retaining  our competitive positionand the financial servicesbusinesses that are basedhere.
4. It is not possibleto extrapolate amaximum tax rateforbusiness' from these figures as taxable profits inthe finance sector were not only charged at 20%forsome entities, butalsoat International BusinessCompany rates, whichrange from 2%up to 30%.
5. This is notpossible as 2010 profits will notbeassessedand charged to tax until next year at the earliest and the profits for earlieryears,which will yield tax in2010, have only recently been assessed,manyonan estimated basis.  In addition, robust statistical information on corporate profits in 2010 will also not be available untiltheFinancial Institutions Survey andGVA figures are published for 2010 (in 2011).
6. A substantialamountof work would berequired to answer this question and may not even be fruitful, as data on corporate profits in other jurisdictions and in particular offshore centres may either not be readily available or even published. Giventheanswerto c) above the Minister doesnotfeelit would be a sensibleuseofthe Treasury's resourcestocollect, analyse and publish such information.