At the end of 2015 The Guardian Newspaper published an article with the headline “The fall of Jersey: How a tax haven goes bust”. Fortunately The Guardian has fairly limited circulation. Unfortunately social media does not, and the rumour that the article sparked prompted phone calls from several concerned clients. The article contained negative comments from the usual suspects. So with recent comments about zero ten, and moans from the left that a tax system which exempts the lowest income earners from paying any income tax – and pays out tax free
income support at levels that some would find eye watering – is somehow unfair, let’s look at whether Jersey is actually going bankrupt. I note that our newest Senator is now attacking the wealthy residents that pay a lot of tax in
monetary terms but a lower percentage. Have you ever tried to pay your bills using a per-centage? You need real money to pay your bills and we need real money to pay income support and allow around 35% of the population to pay no income tax at all.
If you are running your household finances in a perfect manner, which few of us do in reality, then you would ensure that income exceeded or matched expenditure and debt would be avoided. This would result in a balanced budget or a surplus. Of course most of us take out mortgage debt with a repayment plan that should ensure it is repaid before we leave this world – therefore not being of such low moral standards that you leave a pile of debt for your children (unlike large Governments).
The last time France had a balanced budget, or surplus, was 1974. Italy and Greece are by many measures bust, and the UK economy is likely to spend £67.6 billion more this year than it receives in income if you include depreciation. The UK owes more than £1.6 trillion to its creditors. If you compare that to the UK’s population, then the national debt attributable to every man, woman and child is in the region of £24,900 each.
The Jersey budget deficit in 2015 was £5 million – albeit it increases to £50 million if you include accounting depreciation. With a little more confidence in respect of how we treat personal taxation contributions by companies it is a deficit that can be filled without fleecing middle class Jersey. Unlike the UK where every person is in debt, every person in Jersey is in credit.
Guardian Media Group, the parent company of The Guardian, announced pre-tax losses of £173m. With employment at record levels the Island is in better shape than just about anywhere else in the world. It is not Jersey that is going bust.