Public Finances & Taxation


  • Jersey should maintain its long-standing practice of financing current expenditure from current revenue and holding significant reserves. Borrowing should be used only to finance capital investment,  pandemic-related expenditure and refinancing liabilities.
  • Jersey should maintain the low tax policy that has served the Island well, raising the necessary revenue to finance public services and support low-income families.
  • The income tax structure should treat men and women equally and have high tax thresholds such that a significant proportion of income earners pay no income tax and over a quarter is paid by the top 3% of taxpayers.
  • The minimum annual income tax contribution required from high value residents should be increased from the current £145,000 to £250,000.
  • A broad-based GST should be maintained, low-income people being helped by income support rather than by attempts to lower the tax on items they buy.
  • No new taxes on capital or inheritance should be introduced.
  • The taxation system should secure the maximum possible tax revenue from remote working.
“A key point for Jersey is that tax rates are to some extent a “price” for living or operating in the Island.” 

Public finances

Compared with many other jurisdictions, Jersey’s public finances are in a sound state notwithstanding the public expenditure implications of the pandemic. Jersey has had a longstanding practice of financing public expenditure out of taxation and at the same time holding significant reserves.

Two factors have led to a sensible change of policy in respect of borrowing. The pandemic has necessitated a huge increase in public expenditure in a short time. And at the same time interest rates have fallen to historically low levels, substantially below the return that the Government achieves on the various funds that it holds.

It has therefore made sense for the pandemic-related expenditure to be financed in the short term by borrowing to be repaid over a period of years and for the large items of capital expenditure, in particular the hospital, which have a life of many years, to be financed by borrowing.

Similarly, the extensive house building programme by Andium Homes is being financed by borrowing, the cost of that borrowing being met by rental income.   The Government is also planning to borrow £480 million in order to refinance pension liabilities, which will lead to a saving of £700 million after adjusting for inflation.

Jersey’s Fiscal Policy Panel’s view is that the planned borrowing for these three purposes is appropriate and in line with the Fiscal Framework.

Tax policy

Jersey has a tax system that is simple and stable, which has served the Island well. The States Assembly has agreed to a set of tax policy principles.

    1. Taxation must be necessary, justifiable and sustainable.
    2. Taxes should be low, broad, simple and fair.
    3. Everyone should make an appropriate contribution to the cost of providing services, while those on the lowest incomes are protected.
    4. Taxes must be internationally competitive.
    5. Taxation should support economic, environmental and social policy.
    6. Taxes should be easily implementable and administrable at a reasonable cost.
    7. No one individual type of taxation will meet all these principles. But overall, the tax regime should represent a sustainable balance.


A key point for Jersey is that tax rates are to some extent a “price” for living or operating in the Island.  It follows that it cannot automatically be assumed that any increase in tax rates will increase revenue.  It is possible that the effect will be to reduce activity and therefore total tax revenue.  Analysing the wider effects of possible tax changes is therefore critical in determining policy.

Tax revenue

It is helpful initially to note the breakdown of tax revenue.  The 2020 figures are shown below –

Income tax paid by individuals – £463 million, 54%
Income tax paid by companies – £120 million, 14%
Goods and services tax – £94 million, 11%
Impôts (tobacco, alcohol and fuel) – £74 million, 9%
Stamp duty – £37 million, 4%
Other – £64 million, 8%
Total – £852 million, 100%

Compared with other jurisdictions Jersey stands out as having a low proportion of tax revenue raised from expenditure taxes (9% as against an OECD average of 33%) and higher proportions from personal income tax and from tax on corporate profits.

Income tax

The tax thresholds in Jersey are high compared with the UK and other jurisdictions. In 2022 the single person’s allowance is £16,550 as against £12,750 in the UK (2021/22), £11,875 in Guernsey (2021) and £14,250 in the Isle of Man (2021/22).  Jersey has just a single rate of income tax – 20% – whereas in the UK a rate of 40% is levied on income over about £50,000 and 45% on incomes over £150,000.

The high thresholds mean that a significant proportion of workers in Jersey pay no income tax.  In 2018 the 70% of taxpayers with the lowest incomes contributed 20% of total tax revenue.  The 2.7% of taxpayers with the highest incomes contributed 26%.   This progressive tax structure should be retained.

Jersey is moving to a tax system in which men and women are taxed separately.  This is fully justified and long overdue. There are inevitably some transitional issues, but these have to be accepted when moving from a long-established but inappropriate arrangement to one in line with modern day society.

Tax paid by companies

It may be tempting to think that the tax burden on people in Jersey could be lowered if the burden on companies was increased. This is misguided for three reasons –

    • Ultimately all taxation is borne by individuals, not by companies. The position is similar with GST which is physically paid by retailers but borne by people through higher prices. In the case of companies, an increase in taxation on corporate profits means lower salaries, bonuses or dividends all of which are taxed, so other things being equal an increase in tax on company profits leads to a reduction in personal income tax.
    • Jersey attracts a huge amount of international business partly because of its tax structure. As in the UK and many other jurisdictions, the debate on company tax concentrates on international competitiveness. The rate is fixed in Jersey so as to secure the maximum amount of income.
    • The figures are distorted because of the impact of partnerships. Partnerships are not companies and do not pay income taxes as companies. Rather they distribute their profits to the partners who are subject to income tax. If those Jersey law firms and financial services firms that are partnerships changed the structure to become companies then the effect would be a significant increase in income tax raised from companies and an equally significant reduction in income tax raised from individuals.


The importance of these three points is demonstrated by the fact that finance centre activities account for 22.5% of the labour force, 39.5% of economic activity and around 70% of total tax revenue.  Most of this derives not from the taxation of businesses but rather from the personal tax paid by people employed in the businesses.

High net worth individuals

Going back nearly 200 years Jersey has attracted wealthy immigrants because of the natural attractions the Island has to offer together with low tax rates.  Jersey has benefitted through wealthy immigrants paying a substantial amount of income tax.

The policy in Jersey today is to attract a net increase of between 15 and 20 high net worth individuals each year. In 2019 169 high value residents paid around £21 million in income tax, an average of £124,000 each.  This represented 4.5% of Jersey’s total income tax. In 2021 the figures are estimated at £26 million and 5.6%.

New high value immigrants are required to pay a minimum of £145,000 a year in income tax.  By purchasing expensive properties they also contribute significantly to stamp duty and a number of them are significant donors to local charities and supporters of local businesses.

The aim should be to attract a smaller number of people paying substantially more in tax – £250,000 a year should be the minimum requirement.

Goods and services tax (GST)

Most jurisdictions now have a Value Added Tax (VAT), currently 20% in the UK but with some exemptions.  In Jersey there is a simpler goods and services tax (GST), levied at the much lower rate of 5% with very limited exemptions.   There is a £300,000 threshold for GST, so small retailers are exempt, benefitting their customers.

It is reasonable to consider whether there should be more exemptions. The case is sometimes made for exempting basic necessities such as food. One difficulty with this approach is defining what constitutes basic necessities. Bread and milk are food but so are lobster and the best cuts of meat.

It is virtually impossible to draw a meaningful line between necessities and non-necessities in a way that works without producing significant distortions and practical problems.  There is a rather more important point – that expenditure on food is directly related to income.

The 2014/15 household expenditure survey (the most recent one done in Jersey) showed that the 25% of households with the highest incomes spent an average of £127 a week on food and non-alcoholic drinks whereas the 25% with the lowest incomes spent £50.  If food was exempted from GST the top 25% of income-earning households would benefit more than twice as much as the 25% of lowest income earning households.

It is for this reason that it is more sensible to help low-income people through direct income support and the community cost bonus rather than through a complicated system of exemptions from GST. The current broad-based GST should be retained.

Taxation and remote working

Jersey is home to a significant number of international businesses, employing some people in Jersey and some in other jurisdictions.  With the increase in remote working as a result of Covid, an increasing number of people are working in a tax jurisdiction that is different from the jurisdiction in which their employer is based.

The tax implications of these issues are complicated and cannot be determined by one jurisdiction in isolation. It is important that Jersey is at the forefront of understanding and dealing with these issues so as to help secure the maximum amount of tax revenue.


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