Jersey Finance Discounts Erroneous Reports

by Amanda Banks, Tax-News.com, London

21 September 2009

Geoff Cook, Chief Executive of Jersey Finance, has in a statement dismissed media coverage that has "inaccurately" suggested that the island is facing financial difficulties.

Responding to reports that British dependent territories, particularly the Cayman Islands, may need to be bailed out by the UK taxpayer, Cook said:

“Jersey is a fully diversified financial centre which has not experienced a banking collapse and does not expect to do so, this is as a result of a careful and prudent approach to granting banking licenses including a policy of only permitting banks within the top 500 to operate in Jersey.”

"The Jersey government has no debt and had reserves of over GBP500m at the end of 2008. Its finances are strong, and there have been considerable efforts to build resilience into the Jersey economy through long-term strategic planning."

Cook went on: “Jersey introduced a new tax regime in 2009 which continued to focus on long-term strategic planning and stability and this gave rise to a potential fiscal deficit. However, the States of Jersey had planned for this since 2002 by introducing on a staggered basis a number of measures generating tax revenue directly and indirectly from residents and businesses including some which are not as affected by the general economic cycle. These include:

• Goods and services tax of 3% – GBP45m;
• Benefits in kind legislation – GBP10m;
• Reduction in personal tax allowances for the wealthy – GBP10m;
• Introduction of a pay as you go tax collection – GBP10m.”

“Jersey has also put a clear fiscal stimulus package in place to support the economy during the current downturn. This year the government launched a GBP44m fiscal stimulus (10% of the annual public expenditure) package to support the economy through the recession and has identified many savings in public spending in its Business Plan for 2010.”

“Jersey’s finance industry has been recently recognised by the IMF as the best jurisdiction in its recent assessment," Cook continued. "The Financial Stability Forum reviewed Jersey’s finance industry as a well-regulated and mature jurisdiction. Jersey is on the OECD’s ‘white list’ and was praised by the UK government in June this year for its firm commitment to transparency and exchange of information in tax matters and has been cited as an example for other jurisdictions to follow.”

Cook concluded: “While no financial centre has been immune to the current economic crisis, the government of Jersey has maintained sound public finances and the Jersey finance industry has full confidence it operates in a fiscally stable, well-regulated and diversified jurisdiction with attractive future prospects for investors and businesses looking for reassurance in a time of uncertainty.”

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