Those whom the gods would destroy . . .
Our treasury minister Philip Ozouf is quoted in The Observer saying:
"We are stronger and more prudent and less aggressive than many of our competitors. We have been for a long time a quality brand that sets us apart. Yes, 53 per cent of our economy is in financial services, but that's 53 per cent of quality."
This in the context of his revised forecast that Jersey is heading for a budget deficit of up to £100 million in the next fiscal year.
Which prompts a number of observations.
First, this situation has been building up for a long time. Ever since Jersey first mooted its foolish zero:ten tax policy, which axed corporation tax rates on local businesses from 20 per cent to zero, and introduced a 10 per cent rate on profits of financial services providers, it was clear that budget deficits were unavoidable unless they hiked the rate of the general sales tax to at least three times the current rate of 3 per cent. This is the most likely next step.
Second, the idea that Jersey has a quality brand is simply risible. Amongst the spivvier elements in the City of London they talk of "Jersey or jail", implying that some of their dodgier deals will either make them a fortune -- in which case they emigrate to London's nearest offshore havens in the British Channel Islands-- or the scam bellyflops and they go direct to jail (most likely collecting a great deal more than £200 on the way!).
Let's get real: way, way back in the mists of time our early potatoes, our sun and sea tourism, and our world famous cows were all quality brands. Those days are long gone. Talk to people in continental Europe, America and further afield and you'll find that the Jersey brand has become synonymous with tax evasion, dodgy dealings and financial de-regulation.
Third, with over half of the island's economy dependent on financial services, Jersey is "crowded out" and its political aparatus is geared solely to promoting tax haven activity, as Ozouf's statement demonstrates. Read the wording carefully and you'll notice how the treasury minister (as an aside, note the aggrandisement of this post: Jersey's population is comparable in size to a commune across the water in Britanny) talks more like the marketing manager in a PLC (public limited company) than a politician responsible for good governance and economic sustainability.
The plain fact is that Ozouf and his colleagues in the Council of Ministers are totally tied to tax haven activity. They have been every bit as aggressive in promoting offshore finance as their competitors (hence the zero:ten policy), and they are simply unable to devise an alternative development strategy to reduce the island's dependence on activities that Britain's Lord Turner described earlier this week as "socially useless." 53 per cent of quality. Whatever!
As the international tide turns against tax haven activity Jersey needs urgently to find a Plan B. But Philip Ozouf and his colleagues are stuck in the ostrich position and cannot budge from it. Meantime the cost of living is unbearable for anyone not connected to the banking industry, and our beautiful island gets more crowded by the day as our benighted leaders relax migration controls in the mistaken belief that population growth will stimulate the economy.
Those whom the gods would destroy, they first make mad.
From our guest blogger in Saint Helier, Jersey