The financial problems allegedly being encountered by the Cayman Islands -- recently played down by the Caymanian authorities -- have led to media speculation that Jersey must be experiencing similar difficulties, the Jersey government announced this week.
However, outlining the differences between the two jurisdictions, the Jersey government statement noted that:
“Before the current economic crisis, Jersey had already modernised and broadened its taxation system. Public consultation on tax reform began in 2001; a 3% Goods and Services Tax and a 10% tax for financial institutions were introduced in 2008.”
It continued: “Jersey runs a strong, prudent fiscal policy. Since the 1980s, the island has paid budget surpluses into a long-term savings account. This Strategic Reserve currently holds GBP500m, equal to 12% of the island’s total annual economic activity, and the government has no public debt.”
“This prudent approach to fiscal policy was strengthened in 2006 with an improved fiscal framework which introduced a Stabilisation Fund (effectively a second savings account). The government has used this to put money aside in periods of growth, which is now being used to support the economy through the current downturn.”
“Jersey also introduced an independent Fiscal Policy Panel of leading economists to publicly advise the Treasury Minister. This use of independent advice in setting fiscal policy has few parallels in other small jurisdictions, or even in larger economies.”
Jersey’s finance industry has reportedly been relatively unaffected by the global downturn, with only modest job losses to date. Profits for 2009 are likely to be down after a strong run lasting several years, but the diversity of Jersey’s finance industry is expected to limit the overall impact from a downturn in any particular financial sector, the authorities have argued.
“Jersey’s long standing commitment to international standards of regulation, co-operation and transparency should ensure its continued success as an international finance centre in the years ahead. Jersey firmly supports the OECD drive to achieve a level playing field in tax cooperation, including an end to the bank secrecy laws that exist in other jurisdictions,” the government’s statement concluded.
The Leader of Government Business in the Cayman Islands, William McKeeva Bush has denied that the picture for the Caymanian economy is as black as it has been painted in recent press reports, and in a recent letter from Parliamentary Under Secretary of State with the UK Foreign and Commonwealth Office, Chris Bryant.
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