A tax by any other name?

On the 18th April (tomorrow), the States will debate the proposition lodged by Deputy Kovacs regarding development levies, which provides for a tax to be paid by a vendor of land, where that land is rezoned by the States and/or planning permission granted to develop the land.

The Council of Ministers has lodged an amendment to the proposition removing the reference to tax as put forward by Deputy Kovacs and instead refers to a “fair charging mechanism”. Whether called a tax, levy or something else, if implemented, it will still be money payable to the States involuntarily.

The Council of Ministers’ amendment advocates caution and sufficient time to consider the options to introduce such a charging mechanism. Whilst that sentiment is to be applauded, the historical basis for previous propositions has been fairness for the community as a whole, to avoid only the landowner benefitting from any increased profit, when it is States policy that essentially decides that the landowner will benefit, all in the name of benefitting the people of Jersey.

Is the concept really fair though where it would still be a government decision to rezone land or grant planning permission and therefore the possibility of additional income for the States may influence a rezoning decision or the granting of development permissions.

Who will actually benefit from the increased States income? What impact will it have on the property market as a whole, as the additional cost of the “charging mechanism” will no doubt seek to be recouped by someone somewhere in the purchase process? What of the Bridging Island Plan, which already provides for a standard rate charge, when planning permission is granted, to fund a Sustainable Community Fund? What of the experiences of other jurisdictions, which have tried to implement such mechanisms and ultimately abandoned them? Will this be the gateway to capital gains and inheritance tax?

The debates, both tomorrow and in future, will no doubt be interesting and likely polarising; it is not the case that all landowners are rich and have no financial worries. At a time when the people and businesses of Jersey are experiencing increasing financial pressures, is it right or fair that yet more taxes may be imposed? Whatever the outcome of the proposition, the States’ have a delicate, and difficult, balance to strike.