Who's afraid of the Big Bad Budget?

Who’s afraid of the Big Bad Budget?

Everyone. And it's no laughing matter.

At the end of last month Treasury Minister, Senator Philip Ozouf, delivered to the States an unprecedented set of economic proposals, designed to steady the good ship ‘Jersey’ from 2011. The goal – to plug the £112 million annual leak.

The Senator said Jersey should aim to put money in the coffers by asking Islanders to pay more, such as: GST up to 5%; cigarettes up by 11%; booze up by 7%; higher Social Security payments for those earning £44k or more; higher rates of stamp duty and Land Transaction Tax (share transfer); and a 2% rise in fuel duty. Assurances were given that those who could less afford to pay would be protected (Income Support to rise to counter GST).

The Senator said he was not in a position to confirm what, if any, rises would be made in relation to taxes on businesses and corporations, and the Island’s wealthiest residents.

No two budgets are the same, yet elements of the Ozouf Budget echo aspects of the UK government’s proposals, which led to passionate exchanges in Westminster last month, whereby Labour accused the Conservatives of ‘squeezing the middle’ in its own Comprehensive Spending Review.

As well as asking residents to pay more, the government wants States departments to belt-tighten. For example, the Senator has proposed a public sector voluntary redundancy programme, in an attempt to reduce the government’s wage bill.

The Senator said that tough decisions needed to be made today. In recent years, Jersey has raided the cookie jar (a ‘rainy day’ fund of approximately £560m) to the tune of £160m. The States is asking Islanders for a show of solidarity in helping turn things around. For many, Jersey’s economy is regarded as a very clever one-trick pony, but new or collateral ideas are in short supply. Islanders’ faith in the Ozouf regime towards 2013 may be eroded if higher taxes and duties don’t produce results – and the government doesn’t demonstrate that it can operate efficiently. Only time will tell whether the 2011 Budget caused the States to step up to the plate – or placed Jersey’s taxpayers at the lip of a very slippery slope.

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