Prior Year Basis Tax Reform Review

​It had been envisaged within the Government Plan 2020 - 23 that a review of PYB taxation would be combined with awaiting changes to the existing taxation system such as independent taxation and would be rolled out during the life of the Government Plan 2020–23.

Around two-thirds of non-corporate taxpayers are currently classified as Prior Year Basis (PYB) taxpayers and pay income tax one year in arrears. 

As part of Government thinking on post-pandemic fiscal stimulus measures, the Minister for Treasury and Resources (the Minister) has proposed that the taxation review should be accelerated with a view to abolishing PYB payment retrospectively for the 2020 year of assessment.

Proposals have been lodged by the Minister on the 22^nd September 2020 confirming that if adopted the PYB taxpayers’ 2019 liability would be “suspended” and would be repayable by PYB taxpayers over a period of years (earliest 2023) and a range of repayment options would be offered. All taxpayers’ 2020 tax liabilities would be paid on a current-year basis, calculated in 2021 following receipt of the 2020 tax return.

The PYB will be debated by the States Assembly on the 3^rd November 2020. If adopted by the States Assembly this would require an Amendment to the Income Tax (Jersey) Law 1961, to be lodged and effected by Acte Operatoire before the end of November 2020.

​The Panel are analysing how/if the proposed changes meet with fiscal soundness and economic sustainability. Considering the financial implications of the proposed changes to the taxpayer. Highlighting how the proposed changes could affect Government systems and the manpower involvement. Ascertaining affects for Government finances on uncollected tax from 2019. Understanding the rationale behind the proposal and assessing the structure and process of the proposed changes.

1.     To conduct detailed scrutiny of the proposals set out in the Council of Minister’s Report and propositions lodged by the Minister of Treasury and Resources:

a)  To assess overall appropriateness and deliverability against strategic priorities.

b) To consider any disparities between the Minister’s statement within the Government Plan 2020 – 2023 versus the proposals.

c)   To ensure the proposals meet the criteria as set out in the Government Plan 2020-2023.

2.     To consider the implications of the proposals on public finances:

a)  How possible deficits could affect the State’s Finances.

b)  To review the impact, if any, of late tax returns and their effect, if any, on the CYB income process.

c)  To review the States costings [when available] and to consider the fiscal soundness of the proposals and their potential impacts on the lack of revenue.

3.     To consider fairness and transparency:

a)  To consider the consultation process and information provided to taxpayers.

b)  To ensure the proposals simplify the tax system and make it fair and equitable.

c)  To analyse how the payment of tax arrears will affect the taxpayer and ensure the impact of the proposals on the taxpayer have been fully taken into account.

d) To ensure the views of key stakeholders are captured and taken into account during the review.

4.     To consider repayment of 2019 PYB Income tax:

a)  To analyse repayment terms and what “possible” interest free means.

b)  To review what minimal interest means and how this will be calculated.

c)  To consider any potential economic impact of the repayment proposals.

5.     To consider administration and process:

a)  To review if the Minister has taken other changes to the tax system into account which may affect household income (Independent taxation in 2022, abolition of mortgage relief in 2025).

b) To have a clear understanding of the proposed changes to the Departmental systems and any contingency plans the Department has in place, should there be any delays or unexpected complications.