Jersey Senator Delivers Budget Speech

by Jason Gorringe, Tax-News.com, London

10 December 2008

Senator Terry Le Sueur delivered his final budget speech as Minister for Treasury and Resources to the States Assembly on Tuesday.

Le Sueur spoke about how the economic crisis had affected Jersey’s economy and how they would use tax measures to stimulate growth in the unlikely event of a recession on the island.

He said:

“Some countries have effectively gone bankrupt and had to be bailed out by the International Monetary Fund. The UK and America, already deep in debt, are going even deeper. Some neighbouring countries don’t have the tax revenues to fund even their basic public services."

“In contrast, Jersey has none of these problems. We are in a far better position to weather the storm ahead then any of our neighbours. We have no debt. We have no deficits. We have substantial reserves. And, because the States had the courage and foresight to reform our tax structure, we will have the tax revenues to continue to fund our schools and hospitals, pensions for the elderly and benefits for those in need. And, when the need arises, we will still have funds to invest during any recession.”

The Jersey government believes that the jurisdiction is well placed to endure any future economic downturn, noting that the island’s economic conditions have not deteriorated as fast as those elsewhere. Le Sueur also said that a number of factors have come into play that will help to ensure that Jersey remains out of recession:

"Firstly, the States has already decided to cut taxes and increase spending in the Business Plan. This will stimulate Jersey’s economy. Secondly, UK interest rate cuts will also benefit the economy. Thirdly, food and oil prices have already started to fall. And finally, the weaker pound should help Jersey’s finance and tourism industries."

Regarding forecasts for 2009 the Fiscal Policy Panel at present expects small but continuous economic growth. The Jersey government therefore has not enforced drastic tax cuts like those undertaken by countries forecasting negative growth. The Panel also recommends that the States should not, as yet, be cutting taxes in order to stimulate the economy. The Panel does recommend, however, that contingency plans should be drawn up for the eventuality of an economic slowdown, although le Sueur indicated that the government has already initiated this process.

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