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Economist Argues In Favour Of Jersey's Tax Strategy

by Jason Gorringe, Tax-News.com, London

19 July 2007


David Kern, Economic Adviser to the British Chamber of Commerce, has argued in support of Jersey's decision to cut corporate tax and introduce a goods and services tax (GST).

In a report commissioned by Jersey’s Chamber of Commerce, Mr Kern suggested that introducing GST and reducing corporate tax are the correct strategic responses if Jersey is to safeguard its key industry - financial services. He stressed the importance of continuing to support the finance sector, since this will in future continue to be Jersey’s main wealth creator.

Mr Kern was in the Island earlier this week speaking to the Chamber of Commerce about the prospects, opportunities and threats facing Jersey’s economy.

The former Chief Economist to NatWest maintained that the focus on GST as the main tax aimed at closing the fiscal hole created by the 0/10 framework is correct, since there are good economic arguments for taxing consumption, rather than income or profits. The States of Jersey will introduce GST in Jersey next spring at a rate of 3%. It is estimated this will bring in GBP45 million to fund public services.

Mr Kern also praised Jersey’s politicians and civil servants, crediting them with creating the background for the Island’s economic success.

The Minister for Treasury and Resources, Senator Terry Le Sueur commented:

“We welcome David Kern’s assessment and any constructive debate about the future of Jersey’s economy. Mr Kern stressed the importance of growth combined with a medium-term fiscal framework. I completely agree with him and welcome his support for Jersey’s strategy, enshrined in our growth plans, 0/10, GST and 20 means 20, together with the Fiscal Framework agreed by the States last December. We hope to have further discussions with Mr Kern about the recommendations he makes in his report.”

A comprehensive report in our Intelligence Report series giving background tax and residence information on many of the key offshore jurisdictions is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report4.asp

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