Scrapping tax on Jersey pensions is unaffordable

Abolishing tax on old age pensions would be "unaffordable", Jersey's treasury minister says.

States members in Jersey agreed to discuss the issue of whether people should be charged tax on their old age pension after a petition was signed by more than 5,000 people.

The petition claimed the tax was unfair in the context that pensioners would have paid tax on their lifetime earnings.

But, in a report on the petition, Treasury Minister Elaine Millar said about 50% of the island's pensioners did not pay income tax.

Jersey has a tax threshold of £20,000 for single individuals and anyone with income below that did not pay any income tax, the report said.

"No pensioner whose income is solely the old age pension pays income tax", it said.

It said no tax for every pensioner would be "unaffordable", adding income tax paid on the old age pension was estimated to be about £21m per year on 2022 values.

The report said "without significant reductions in public spending" the exemption could only be funded from the social security fund.

"Exempting the old age pension from income tax would only benefit pensioners who pay income tax," it said.

"It would do nothing for the half of pensioners (those with lower incomes) who do not already pay tax."

It said the resulting loss in taxation would mean other groups, such as young families, would have to pay more in tax or social security contributions.

The petition will expire on 30 November.