Industry leaders discuss island high value scheme

Industry leaders have debated Jersey’s high value residents scheme

Mary O'Keeffe was among several business figures who said high value residents make a positive contribution to the island’s economy

More than 260 leaders from business, finance and law gathered to discuss the part high value residents play in Jersey’s economy.

At the Chamber of Commerce lunch on Thursday, attendee Mary O'Keeffe said high value residents "were extremely important" to the island.

But a former economic adviser to the government described the tax paid by high value residents as "piffling".

Around 260 families currently live in Jersey after moving there through the scheme.

"They are extremely important, so here today the room is full of private bankers, tax accountants, lawyers, people like myself and professionals who all work with high net individuals.

"So, they bring an enormous amount to the economy and that doesn't even touch on what they bring in regard to philanthropy."

O'Keefe said: "I can understand that but that's not looking at the argument the right way.

"First of all, the basic pay that they pay is £250,000 and that's before you even look at their worldwide income.

"And the 1% often equates to many millions and that's what people don't understand.

"High net worth individuals are extremely mobile, they are fluid, they can pick up and go wherever they want and they want to go somewhere that's safe, that's secure, that their wealth is going to be looked after and they're not going to feel that they're going to be ripped off."

Industry leaders from law, finance, business and real estate met at a Chamber of Commerce lunch to discuss the role of high value residents in Jersey

Garry Bell, a tax adviser to high value residents, said he believed Jersey would lose wealthy people if their tax was raised.

He said that if the money they earned above £1.25m was taxed at 20% rather than 1%, it could harm the economy.

Former economic adviser to the government of Jersey John Christensen said the tax paid by high value residents was "piffling"

"If we tax those individuals at 20% the numbers would reduce dramatically. So instead of having a net increase of say 18 or19 individuals a year you're probably only looking at one or two," Bell said.

"So, we're sacrificing by seeking to tax them more, we're sacrificing that the direct income tax take, the stamp duty take, the employment, the GST, there's a whole raft of economic benefits that we sacrifice by actually seeking to tax those individuals at 20%.

"We are competing with a number of other jurisdictions, Dubai - zero tax. Monaco - zero tax.

"We're already one of the most expensive jurisdictions."

John Christensen, a former economic adviser to Jersey's government in the 1980s and 1990s, was critical of the High Value Residents programme.

He said the tax they pay is "piffling, frankly".

"I think it's quite divisive, particularly in such an unequal island community.

"As a development strategy, who benefits? They benefit because they're paying very little tax on their income but is it going to benefit young Jersey people? Not at all.

"I suspect its going to contribute more to ratcheting up of house prices, ratcheting up of prices in the shops, and a higher cost of living generally.

"And where they contribute to the island's economy, outside paying frankly minimal amounts of tax, lies with construction work.

"They've built endless, frankly, rather ugly and inappropriately sized houses."