The Jersey Evening Post has reported:
JERSEY could face a new £60 million tax ‘black hole’ by 2012.
The panel of expert economists who advise the Treasury Minister and the States have warned that a ‘structural deficit’ in States finances is emerging.
And they say that States Members have to act now to tackle spending pressures at departments as well as long-awaited pressure from the ageing population and the New Directions health strategy.
The Fiscal Policy Panel says that the deficits ‘require tough decisions on cutting spending or increasing taxation’ and that States Members have to show discipline about approving new spending.
I warned of this in 2007. They really should have heeded the warning I issued. It was timely, appropriate and right. I even provided it free of charge.
The latest report proves what I have said time and again: Jersey is heading for bankruptcy, and that as that becomes apparent the finance industry will be off like a shot. The one thing tax avoiders and evaders want most of all is strong stable government. They refuse to pay for it, of course, but they do demand it. And it is becoming very obvious that this is the one thing Jersey will not be able to deliver.
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Bankruptcy?!!!
Since we appeared on the white list some finance business has gone through the roof! Thanks to you and John we are now recognized as a good place for business. In fact you have done some offshore finance centres a massive favour with all this spot lighting you were doind over the 6 months! This tax gap during recession is no big deal anyhow, and you know that. Cheers Richard and John from Jersey x
James
Sorry – we know that’s not true
So do you
Now why not cut the crap and face reality?
Or do you like falling off cliffs?
Richard
Richard,
You know full well that Jersey has strategic reserves (I don’t know if that is a concept that is understood in the UK – let me know if you need it to be explained) of over £600m.
It does look to have a structural deficit of around £60m a year, but has VAT/GST at a level of 3%, a top rate of income tax of 20% and no capital taxes. If it raised VAT/GST to 7% it would cover the structural deficit.
If you offered that to Gordon Brown he would bite your hand off.
Paul
You have a small reserve yes. But no borrowing capacity – which is why you need one
That though is not the point. What is incredible is your assumption that you can pile tax on tax on the people of Jersey so that they can continue to provide tax haven services to those who refuse to pay tax in the countries in which they are resident
19% of Jersey islanders objected to GST at 3%
How many more do you think it will take to vote out your planned tax hikes?
Jersey has a poor democratic system – but it’s good enough to get rid of finance when finance ceases to pay its way – which is what is happening now
Don’t doubt it – your days are numbered and the poverty of your understanding shows exactly why that is so
Richard
Richard,
I believe people are rational. What is the alternative to Jersey maintaining a finance industry but perhaps having GST at 7%?
In your view, as articulated in the past, it is that offshore Islands experience a decline in levels of wealth until they are equivalent to the Isle of Wight and have to beg to become a full part of the UK and EU so they can be subsidised by London. There would be no employment left for younger people and the average age of the population would be very high.
I suspect that is not a very attractive alternative. Most people would prefer to remain lightly taxed and independent than be highly taxed and see a collapse in the Island’s main industry (an industry which is 85% staffed by local people rather than expats).
So yes, Jersey has some problems ahead. As you say, it cannot borrow. But unless there is some compelling alternative on offer, a modest increase in taxes and decrease in public spending is going to be (grudgingly) accepted. Much the same as it will be in every other part of Western Europe. Because, and here is the point you miss, by and large, people don’t like paying more tax.
We have been hearing this doom and gloom about Jersey going down for years. Turn the record over for a change and perhaps just for once admit you are wrong!
James
I would if there was evidence I was wrong
But all the evidence says I am right
So of course I’ll keep saying it
Richard
£600m would be a large sum of money sitting in anyone’s personal account.
However, it is peanuts as a reserve for Jersey. It equates to about £6,000 per Jersey resident. If ever there was high unemployment, that reserve would disappear in a few months, at best.
It’s just a big number which our incompetent politicians and civil servants like to shout about, in order to make people feel reassured.
Introducing GST was a very stupid move, increasing it would also be very stupid. A new tax will always means more administration, which is costly, and harms the efficiency of small businesses.
So, GST was always inevitable given the States of Jersey’s track record. No doubt they will raise the rate ASAP, and suck even more money out of the local economy.
And, they wonder why they have no tenants for the new Liberty Wharf shopping centre!
Anyone who thinks that Terry Le Sueur and Philip Ozouf have a grip on the situation, needs to take a serious reality check.
Dan
Agreed
Le Sueur and Ozouf have the mentality of the sub-prime lender in 2006 – that their game can go on forever
Richard
Dan
Lets put a reserve of £6000 per capital into perspective. In the UK it would equate to a reserve of £300 billion.Jersey also has no debt. The UK is already bust and has absolutely nothing in reserve. The UK has no scope left for raising taxes whereas Jersey could easily raise an extra £200m per annum of taxes if it had to.
Its nothing but wishful thinking to believe that Jersey is bust. Sure it needs to make some cutbacks and raise more taxes but thats hardly rocket science is it ?
The UK is not all that comparable to Jersey.
Beyond finance Jersey is dead in the water, we have nothing else. Who would want to lend Jersey money in the case of finance coming to an end? How would we ever pay them back?
The UK, on the other hand, remains one of the world’s leading drug and firearms dealers, or pharmaceuticals and aerospace, as they like to call it. No wonder they can borrow large sums of money.
Endless raising of taxes in a small place like Jersey, would be death by a thousand cuts. Businesses and individuals have to make cuts in spending, every time taxes are raised. People lose their jobs, and become a burden on the tax payer. It’s a downward spiral situation.
[…] model is predicated on significant real growth to make its zero/10 tax model work. If it fails the black hole I have long predicted in its finances will become a […]