That was the mixture of good news and bad news offered by Finance and Economics president Senator Terry Le Sueur as he delivered his first Budget speech at the start of what is expected to be one of the longest and bitterest such debates in memory.Senator Le Sueur, who warned of dire consequences if action was not taken now, is strongly opposing all of the 13 amendments that have been lodged so far.
The Budget debate is likely to go on for the rest of the week, with proposals on curbing mortgage interest tax relief, increasing vehicle registration duty and raising the price of alcohol and tobacco likely to be sticking points.Senator le Sueur summed up his challenges, saying: ‘We must control and cut States spending and drive out inefficiencies.
We must provide an environment to promote stable economic growth.’We must lay down affordable plans to meet the demands of an increasingly ageing population.’ He added: ‘I believe my committee and the States can reassure ourselves, by putting the current financial position into context against the current economic situation in the Island, which is actually performing remarkably well in relation to the global economy.
‘But I recognise there is much more to do if we are to sustain our economic and financial position, and 2004 will be a vital year for all of us.
It is a year when we must hold firm to our agreed policy of balanced budgets and not spending more than we can afford.’While he emphasised the ‘excellent health’ of the local economy and said that Jersey’s per-capita income was 40 per cent more than the EU average, he predicted dire consequences if the States did not continue to cut spending and take steps to maximise their revenue.
He said the Island did not want to compound problems in 2009, when the loss of corporate tax receipts would leave an £80-100m hole in States revenue.The mission of the States, he said, was to create an environment for economic growth and he promised a reduction in bureaucratic red tape and more effective encouragement for new business development.’We need to have an economic climate which is going to allow businesses to grow in the future in terms of business growth.
Although we have had a downturn in the last couple of years, it has been nowhere near as bad in Jersey as it has been elsewhere,’ said Senator Le Sueur, who assured the House of the underlying health of the finance industry and said that there were already encouraging signs of international economic recovery.He told Members how a big reduction in the amount of tax the States would be able to take from the finance industry, if Jersey was to remain an attractive place for it to do business after the introduction of changes in EU taxation rules, meant that other sources had to be found.Jersey would remain committed to a 20% basic rate, he promised, with the result that tough new measures were needed now to ward off huge deficits.
Even with this year’s measures, the States would still run a £4m deficit next year.Senator Le Sueur also warned of more new taxes to come, including a sales tax, but said that his policies would help bring down inflation, partly by restricting growth in house prices.
He also promised to introduce a more streamlined property conveyancing system and to allow new mortgage lenders into the island to increase competition.