Cost of living Mini-Budget Review
Launch date: 04/08/2022
Review status: Report published
What is the review about?
The Cost of living Mini-budget – Mini-Budget 2022 – P.80/2022 was lodged on 2nd August 2022 and proposes a package of taxation and social security measures to address cost of living concerns including:
- increasing the personal income tax thresholds and allowances by 12% above the 2022 thresholds and allowances, in accordance with the Table in Appendix 2 of the report accompanying the proposition, to take effect for the year of assessment 2023;
- temporarily reducing by 2 percentage points Class 1 and 2 social security contributions for the period 1st October 2022 to 31st December 2022, comprising a reduction, in respect of earnings below the standard earnings limit (SEL), from 6% to 4% for the Class 1 employee contribution rate, and from 12.5% to 10.5% for the Class 2 contribution rate;
- doubling the value of the Community Costs Bonus for 2022 by increasing the value of the bonus from £258.25 to £516.50.
- setting a fixed value at £70 per month for the Cold Weather Bonus and Cold Weather Payments, regardless of temperature, for the winter months (October 2022 to March 2023 inclusive); and
- postponing the commencement of the obligation for offshore retailers to register under the Goods and Services Tax (Jersey) Law 2007 from 1st January 2023 to 1st July 2023.
Considering the Proposition involves the remits of both the Minister for Treasury and Resources and the Minister for Social Security. Therefore the Panel has co-opt Deputy Southern, Chair of the Health and Social Security Panel for this review.
The Panel's review aims to address the following key areas of concern:
- Decision making – does the Proposition provide sufficient evidence to quantify proposal outcomes and detail how interventions will achieve goals.
- Distributional impact analysis – has the Proposition assessed the impact of intervention on different groups in society. Moreover, does the proposition have any negative effects for groups in society according to characteristics such as income levels or geographical location.
- Targeted support – does the Proposition provide targeted relief to those most impacted by cost-of-living increases.
- Impact on inequality – will the proposed budget measures exacerbate wealth and income inequality within Jersey on the Gini index which is a measure of statistical dispersion.
- Future taxation and/or borrowing measures – how will monetary relief provided through the budget measures be recovered (i.e., through either taxation or borrowing).
The Panel has published its report on 15th September 2022.
A digital summary version of the report can be read here.
Terms of reference
- Conduct detailed scrutiny of the Mini Budget Proposition - P.80/2022: Mini-Budget 2022 [the Proposition] with consideration as to how proposed measures are informed and evidenced to support different types of households from increases in the cost-of-living.
- Appraise whether the Proposition is adequately aligned to address the specific needs of households hardest hit by the cost-of-living crisis.
- Review the economic and environmental impact of the proposed package of support, including its potential to drive further inflation and impact policy.
- Assess whether the Proposition has any negative effect for particular groups in society according to characteristics such as income levels or geographical location.
- Evaluate the impact of the Proposition on the inequality of income and wealth in Jersey.
- Review whether realistic, efficient, and effective implementation measures, targets and timescales have been set for the proposed package of support.
- Consider whether the measures brought forward in the Proposition are sufficient and if more support is likely to be required.
- Assess how monetary relief provided through the budget measures will be recovered.