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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 1st MAY 2012
Question
Will the Minister provide the results of his investigation into effective tax rates by quintile and inform members what these reveal about the progressive nature, or otherwise, of the Island's Income Tax system?
Answer
The Minister has provided below comprehensive data which illustrates the progressive nature of Jersey's Income Tax system. In summary:
- An analysis of individual (married and single) income levels and effective tax rates shows that the top 20% of earners pay 70% of all personal income tax.
- Those with income levels in the top 5% pay 34% of all personal tax, and the top 10% pay 47%.
- This analysis also shows that the bottom 40 % of earners pay less than 2% of all personal income tax , due to their tax exemptions.
- Furthermore, 17,000 individuals (married and single) (approximately a quarter of all income earners in Jersey) do not pay any income tax because of their personal exemptions.
- We already have an income tax system which results in those who earn more paying more, and those who have low incomes being protected by their exemptions.
The following tables give three alternative presentations of information by quintile:
Derived from 2009/10 Household Income Distribution Survey and individual taxpaying population who completed a 2010 tax return
Quintile | Income charged to tax on each individual | Number of taxpayers | Average Tax Effective Rate | % of total individuals tax revenues |
1 | <=£21,500 | 11,885 | 7.33% | 3.5% |
2 | £21,501 – 34,050 | 11,728 | 10.90% | 9.9% |
3 | £34,051 – 50,000 | 9,075 | 12.89% | 13.6% |
4 | £50,001 – 75,812 | 6,873 | 14.68% | 17.4% |
5 | £75,813+ | 6,862 | 17.59% | 55.6% |
|
|
|
|
|
Total |
| 46,423 |
| 100% |
Derived from individual taxpaying population who completed a 2010 tax return
Quintile | Income charged to tax on each individual | Number of taxpayers | Average Tax Effective Rate | % of total individuals tax revenues |
1 | < = £18,894 | 9,285 | 6.78% | 2.1% |
2 | £18,895 – 28,322 | 9,285 | 10.20% | 6.3% |
3 | £28,323 – 40,355 | 9,285 | 11.78% | 10.4% |
4 | £40,356 – 63,919 | 9,284 | 13.84% | 18.3% |
5 | £63,920 + | 9,284 | 17.02% | 62.9% |
|
|
|
|
|
Total |
| 46,423 |
| 100% |
Individual means a single person or a married couple.
In addition to the 46,423 individuals who paid tax for the year of assessment 2010, approximately a further 17,051 individuals were not liable to tax because their total income was below their personal exemption threshold. 10,438 of these had completed a 2010 tax return.
All individuals (married and single) from Taxes Office data base. Year of assessment 2010.
Quintile | Income charged to tax on each individual | Number of taxpayers | Average Tax Effective Rate | % of total individuals tax revenues |
1 | < Exemption threshold | 12,695 | 0% | 0% |
2 | < £17,999 | 12,695 | 4.35% | 1.7% |
3 | £18,000 – 30,899 | 12,695 | 10.24% | 9.0% |
4 | £30,900 – 52,588 | 12,695 | 12.71% | 18.5% |
5 | £52,589 + | 12,694 | 16.30% | 70.8% |
|
|
|
|
|
Total |
| 63,474 |
| 100% |
Analysis of number of taxpayers
Liable to pay tax and completed a 2010 tax return 46,423 Not liable to pay tax and completed a 2010 tax return 10,438 Not liable to pay tax and not required to complete a 2010 tax return 6,613 Total 63,474