Back in 2007 I forecast that if Jersey continued with its tax haven policies it would have a black hole in its finances of £119 million.
This comes from the Jersey Evening Post this week:
I accept that the issue has arisen later than I accepted, but it really is time Jersey admitted I was right, all along.
And what is astonishing is that despite the clear and obvious evidence that the Island's economic and tax policies have failed they are sticking to the disastrous zero / ten tax policy that ensures anyone from outside the Island using it as a tax haven pays no tax there as a result. This is what makes the Island 'competitive' according to its finance industry inspired political leadership. That's why locals are going to have to pay a lot more for the privilege of subsidising tax abuse.
Good luck to Senator Sarah Fergusson who is opposing these plans, I say.
But in the meantime the black hole will not go away: a failed model cannot be mended by tinkering on its edges, and that is all the Island's leading politicians are doing.
PS: I have been asked if the UK can do anything about this. The answer is yes: since the UK is responsible if ultimately responsible if Jersey were to default it could intervene. But we're some way from that as yet, I suspect. Although if I was a UK minister I would be demanding a careful review of the situation.
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I’m no defender of Jersey but your prediction was made before the financial crisis of 2008 which would undoubtedly have affected Jersey’s finances AND the deficit is a projection not a happening AND would be occurring a full 7 years later than you predicted which is well over twice the timespan of your prediction. It really is stretching the boundaries of the word “right” to claim your 2007 prediction was right all along. Unless you also want to claim your stopped clock is an accurate one because it is right twice a day!
The outcome is for all the reasons I predicted
I stand by it
Oh come on Harry this is desperate stuff…………I remember in the early 2000’s when some of the econmic pundits in the Guardian (and elsewhere) were continuously raising concerns about the level of debt building up in the global financial system warning that it was increasing instability which eventually led to the crash of 2008.
No one listened at the time – but we did have a crash did we not even if those warning of it were accused of being ‘negative’?
You seem to be confusing the clairvoyancy we see in the self congratulatory ‘reporting’ of performance in the financial sector with the sound objective and external financial analysis and experience of people like Richard and other more grounded economists.
And Jersey’s governemnt wouldn’t at first attempt to hide the truth from everyone would they to delay the revelations? Especially those who are hiding their money there and who may have ahd a chance by now to move it elsewhere perhaps?
Oh no…….no of course not…………zzzzzzzzzzzzz.
Great of you to wish her good luck, but you would imagine with plenty of time on his hands following his latest election defeat that Nick would be up to date enough to have told you that Sarah’s proposition was already defeated yesterday. Might be time to find a better informant don’t you think ?
Who is Nick?
And do you really think things end with one vote?
‘Thanks Nick
You have played a valuable role in this for a long time’
Not ringing any bells yet ?
That was the only contact with that Nick for about a decade
Candidly, you are lying.
May 3 2015 at 12:14 pm ‘I am aware Nick that you are one who has stood up to be counted’
I can’t recall if I have ever met the Nick in question
I can’t recall off the top of my head how to spell his name
If we have emailed it is not for years: I cannot find him in my records from 2009
You can say I am lying: I know I am not
And he most certainly is not a source for what I write
I just know he does work hard on Jersey
So I suggest you stop the libellous comments
I’m really not sure you comprehend the definition of libel if you believe that simply proving your initial statement to be false is libellous. But just in case this does indeed reach m’learned friends, lets review the evidence:
April 6th 2016 -‘Thanks Nick. You have played a valuable role in this for a long time’
September 28th 2016 – ‘That was the only contact with that Nick for about a decade’
(From your records) – May 3rd 2015 – (‘I am aware Nick that you are one who has stood up to be counted’
That would seem to imply at best a lapse in memory, or at worst sophistry.
I may well be at a disadvantage, lacking as I do any personal experience of a libel case, but on the face of it, I fancy my chances.
I have to say you really are a very sad individual, aren’t you?
And for the record, you’ve joined the time wasters list
Could the zero/ten arrangement change following Brexit?
It seems to me that the whole ring fencing of non-residents was an EU issue, but if the EU was no longer involved would it be easy for Jersey to go back to an arrangement whereby companies owned by Jersey residents are taxed again?
The Isle of Man had things like the Distributable Profits Charge and later the Attribution Regime for Individuals that were only dropped due to EU objections.
It could change, but only if they want heavy EU sanctions……
How long can a fundamentally insolvent enterprise keep trading?
…Not as long as an insolvent public sector entity.
Your view as to when the States of Jersey *should* have run out of money and excuses was probably correct. The fact that they’ve kept the lights on for longer may well involve fiscal trickery that makes the day of reckoning even more destructive.
Richard
Clearly Jersey is a relatively small player in the secrecy jurisdiction business compared to Switzerland, the USA, Cayman and Luxembourg. Yet in your blog you have 670 references to Jersey which exceeds the references to the top 5 secrecy jurisdictions combined. Why such focus on a relatively small player? Why not get cracking on say Delaware.
Because for a long time it let me focus in its abuse of EU law, in particular
Richard
What are you suggesting that the States of Jersey might default on? What borrowings? You do realise that Jersey has cash reserves of close to £1 billion, which is about 8 years worth of the current annual deficit?
I have a feeling you may need to enhance your understanding: if there is a prospect of perpetual deficit then cash in the bank merely delays default but means continuing is reckless because of the indifference it would show to long term liabilities – and Jersey has ample of them
Richard
But substantial cash reserves means that they have several years yet to turn around/reduce their annual deficit. Default is not a remote possibility.
It’s like you or I having £100k in the bank and overspending by £10k on our credit cards for a few months.
But the situation has never changed since 2010 and the failings are profoundly systemic
You say that Jersey is going bust because of a deficit they never close, yet you also hold that UK should run a permanent deficit. What have I misunderstood?
Jersey does not have its own currency
The UK has
Utterly different economic conditions and requirements
Jersey is like a UK council: it is impossible to run deficits in such situations because the money eventually runs out
A government with its own currency cannot do that
Reference Sarah Ferguson mentioned in the piece:
Sarah is a “handbag economist” – that is she believes in (and cites) Mr. Micawber’s dictum:
“Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” So hardly one to be part of Jersey’s salvation.
She got elected in the recenmt Senatorial bye-election on a small turn-out (as is customary, Jersey habitually having amongst the lowest turnouts in the western world) on a platform, as I understand it, of scrutinising those pesky Ministers and their devilish spending plans, and their new-fangled charges.
But it is the “charges” which will see Jersey through for a bit longer. A more centrist Chief Minister, and no ultra-right Ozouf at the Treasury, means a more pragmatic approach to the vast backlog in essential infrastructure which Jersey faces. A health charge will pay for the new hospital, helped by a little raid on the island’s reserves, and a sewage charge will pay for the renewal of the island’s sewerage system. I think waste disposal charges are in the pipeline as well.
All this will be resented by a population which has been told (lied to) for years that you can run a modern society on a low tax (and that really does mean low) taxation model. This takes the form of a constant drip drip of “news” stories, about how the States “wastes” money – as the only possible explanation of why taxes are not going down, or why there is a problem with the national finances.
That mental confusion will be painful, but the charges will have to be accepted. Of course the resentment could turn against the tax avoidance industry for whose benefit the tax system is skewed the way it is. Maybe the island should begin to look seriously at the Murphy Plan B whereby all those highly skilled and clever – with – money brains could be put to use offering financial services to the early corporate adopters of country-by-country reporting . . .
Interesting times.