Jersey States Warned Taxes Will Rise If Public Spending Exceeds Budget

by Amanda Banks, Tax-News.com, London

06 December 2001

The This Is Jersey online news service has reported on a radical plan from Finance and Economics president, Senator Frank Walker, to raise taxes automatically as the States committees overspend on their budgets.

Senator Walker told This Is Jersey that if there is any over-budget increase in public spending or if the State's tax income drops by £10 million then tax allowances on 2002 incomes could be cut by as much as 75 per cent.

According to the report, the reduction in income tax allowances will be automatically activated if the projected deficit for 2003 increases beyond its planned limits. But although 75 per cent sounds a significant sum, Senator Walker claimed that it would affect only the 27 per cent of taxpayers who pay the full rate of 20 per cent and not those who either pay nil tax or the 45 per cent of taxpayers who pay at the marginal rate. For instance, said Senator Walker, depending on personal circumstances, a married couple with two children would likely need a joint income of around £52,000 before they would be affected.

The F&E president made his threatening remarks during his budget speech this week in which he also took the opportunity to warn detractors of the Island's finance industry by reminding them that it employs a workforce of 12,500 on the Island and its taxes alone pay for almost the whole of the health, education and social security budgets. He called upon the critics to suggest where else this revenue would come from 'if they had their wish and elements of the finance industry left for more welcoming shores.'

Recommended