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Jersey Budget: UK Ex-Chancellor Supports Mortgage Relief Changes, Chamber Of Commerce Disapproves

Robert Lee, Tax-news.com, London

20 November 2000


Last week, Tax-news.com reported that Jersey's 2001 Budget would be be dominated by measures aimed at curbing inflation, including tax reforms, amongst which was a proposal to cut mortgage tax relief. On a visit to Jersey last week, the former UK Chancellor Kenneth Clarke said he supported Senator Frank Walker's fiscal plans. However, the Budget proposals have not met with approval across the board. The Chamber of Commerce in Jersey has attacked the States for failing to tackle the underlying problems.

Mr Clarke - who grappled with UK mortgage relief whilst in office between 1993 and 1997 - said: 'I would regard Jersey in the same way I do Ireland: interest rates cannot be moved so your Budget should be used to tighten fiscal policy. Four per cent (Jersey’s underlying inflation rate) is a little high, but it does not mean panic stations. America is a bit higher than that, and there is no point in Jersey doing anything silly. It is not the place for a UK MP – who last came to Jersey as a school boy – to say what the local government should do. However, my first instinct, if I were the finance minister, would probably be to tighten fiscal measures.'

He continued: 'Reducing mortgage relief would be a sensible move – I did that while I was Chancellor, although Gordon Brown finished it off.' He said that once Jersey got rid of mortgage relief, it was unlikely to return.

However, Chamber of Commerce president Seamus Morvan, whilst welcoming some elements of the 2001 Budget, lambasted the Jersey States. He said: 'In the Budget it emerges that there has been a flagrant breaking of expenditure limits by many committees – limits set just last year in respect of States Budgets for next year and 2002. The Chamber would share Finance and Economics’ extreme disappointment at the level of requests for additional funds just one year on. Including pay awards, they lead to a predicted growth in revenue expenditure cash limits by a mighty nine per cent – not the six per cent originally set.'

He continued: 'This year’s Budget claims to be one that will hold back house price rises. Ultimately, however, making people richer or poorer through adjustments to the tax system will not overcome what we all know to be a chronic shortage of housing supply in Jersey. Tinkering with real incomes and a redistribution of wealth will not in itself put roofs over people’s heads.'

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