Manx Experts Speculate Over Impact Of Jersey Tax Move

by Jason Gorringe, Tax-News.com, London

29 November 2002

In the wake of last week's announcements that both Jersey and Guernsey plan to follow in the Isle of Man's footsteps by introducing a zero rate of corporate tax, experts in the Isle of Man have been speculating as to the effect that the move is likely to have on Jersey's economy.

Reacting to the news, the Manx Chamber of Commerce finance committee observed somewhat provocatively that: 'Imitation is the sincerest form of flattery.' Speaking to the Isle of Man Online news service on Thursday, Chamber chairman, Mike Henthorn explained that:

'The Isle of Man has done its homework carefully and the tax strategy originally announced in 2000 has been evolving since then, in fact implementation has already started.

However, according to the IoM Online, there has been some speculation as to where Jersey will find the revenue to replace the £200 million in corporate taxes which will be lost.

'Given Jersey's growing deficit and the absence of VAT it will be interesting to see how they intend to balance their books,' Mr Henthorn observed.

Professor Roger Carey, director of the Isle of Man International Business School went further, suggesting to the newspaper that:

'The announcement by Jersey appears to be a panic reaction to the success of the Isle of Man strategy. Jersey has made this announcement out of any context of other tax changes and reforms, for example the issue of VAT, and as such it is likely to cause Jersey further grief and anxiety as it works its way into the revenue stream.'

However, Jersey's Finance president, Senator Frank Walker has denied that the move is a knee-jerk reaction to the Isle of Man's announcement, and told the Jersey Evening Post that: 'We won't face any huge losses any more than they will. The intention is not to lose any income.'

According to those in the know in Jersey, all will become clear when the government publishes its next fiscal strategy document in Spring 2003.

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