Jersey Chamber Questions States Fiscal Plan

by Jason Gorringe, Tax-News.com, London

14 September 2011

The Jersey Chamber of Commerce, representing island businesses, has questioned elements of the States Business Plan, which outlines measures for economic growth, public sector retrenchment, and discusses tax policy in coming years.

Firstly, the Chamber announced its suprise at the modest savings projected in the public sector through cut backs. Against the background of a 13% increase in public sector employment during 2010, the Chamber has questioned the government's target of cutting just 18 full-time posts, or just 0.3% of total staff, and the decision's potential impact on public finances.

Next, the Chamber urged the government to present a credible plan for driving Jersey's economy forward. In highlighting the importance of presenting initiatives in this regard, the Chamber criticized the government for still having this policy 'under development'.

Lastly on the increasing tax burden on business, the Chamber noted tax hikes in the past year, including a 66% increase in the payable tax rate of Goods and Services Tax (GST), from 3% to 5%. In addition, employers now face an extra 2% social security contribution on employees' earnings above GBP44,000. The Chamber has said the latter measure was 'disappointing', noting that it would serve to discentivize high-value job creation in Jersey.

While questioning the credibility of government spending retrenchment measures, the Chamber also questioned whether ambitious tax revenue targets are achievable. In response to the report, the Chamber said: “The projected increases in income tax take in 2013 and 2014 are interesting given the state of the economy and of course the removal of deemed distribution. For example the current projections forecast an increase in the income tax take of some 20%, or GBP80m (USD126.8m), on 2011 levels which will be good if it happens."

Recommended