Economy of Jersey


Economy of Jersey

Economy - overview:

The economy of Jersey is based largely on international financial services, agriculture, and tourism. Potatoes, cauliflower, tomatoes, and especially flowers are important export crops, shipped mostly to the United Kingdom. The Jersey breed of dairy cattle is known worldwide and represents an important export income earner. Milk products go to the UK and other EU countries. In 1996 the finance sector accounted for about 60% of the island's output. Tourism accounts for 24% of GDP. In recent years, the government encouraged light industry to locate in Jersey, with the result that an electronics industry developed alongside the traditional manufacturing of knitwear. All raw material and energy requirements are imported, as well as a large share of Jersey's food needs. Preferential taxes and absence of death duties make the island a popular offshore finance centre.

GDP:purchasing power parity - $3.6 billion (2003 est.)

GDP - real growth rate:NA%

GDP - per capita:purchasing power parity - $40,000 (2003 est.)

GDP - composition by sector:
"agriculture:"5%
"industry:"2%
"services:"93% (1996)

Population below poverty line:NA%

Household income or consumption by percentage share:
"lowest 10%:"NA%
"highest 10%:"NA%

Inflation rate (consumer prices):
*5.3% (2004)
*2.2% (2005)

Labour force:52,790 (2004)

Unemployment rate:0.9% (2004 est.)

Budget:
"revenues:"$601 million
*£441 million (2004)
"expenditures:"
*$588 million, including capital expenditures of $98 million (2000 est.)
*£460 million (2004)

Industries:tourism, banking and finance, dairy

Notable hotels include:
* the Pomme d'Or overlooking Liberation Square in St. Helier, which during the occupation served as the German Navy Headquarters [cite book |last=Hassall |first=Peter D. |title=Night and Fog Prisoners |publisher=Jersey Heritage Trust |date=1997 |pages=p.63 |url=http://www.jerseyheritagetrust.org/occupation_memorial/pdfs/hassallbookcomplete.pdf] and from whose balcony the Liberation force raised the Union Flag on Liberation Day, 9 May 1945;
* the Hotel de France, formerly the Imperial and the Jesuit college, in St. Saviour overlooking the town of St. Helier;
* the Hotel L'Horizon in St. Brelade's Bay.
* La Grande Vere, in St. Helier overlooking St. Aubins Bay, with views of Elizabeth Castle and the Waterfront.
* The Royal Yacht is a new, modern, luxury hotel situated in St Helier.

Industrial production growth rate:NA%

Electricity - consumption:630.1 GWh (2004 estimate)

Electricity - exports:0 kWh (1998)

Electricity - imports:NA kWh; note - electricity supplied by France

Agriculture - products:potatoes (especially Jersey Royal potatoes, cauliflower, tomatoes; beef, dairy products

Until the 19th century, cider was the largest agricultural export with up to a quarter of the agricultural land given over to orchards. In 1839, for example, 268,199 gallons of cider were exported from Jersey to England alone, ["Balleine's History of Jersey", ISBN 1-86077-065-7] but by 1870 exports from Jersey had slumped to 4,632 gallons ["The Triumph of the Country", Kelleher, Jersey 1994, ISBN 0-9518162-4-1] . Beer had replaced cider as a fashionable drink in the main export markets, and even the home market had switched to beer as the population became more urban. Potatoes overtook cider as the most important crop in Jersey in the 1840's. Small-scale cider production on farms for domestic consumption, particularly by seasonal workers from Brittany and mainland Normandy, was maintained, but by the mid-20th century production dwindled until only 8 farms were producing cider for their own consumption in 1983 [Jersey Society in London, Bulletin, 1983] . The number of orchards had been reduced to such a level that the destruction of trees in the Great Storm of 1987 demonstrated how close the Islands had come to losing many of its traditional cider apple varieties. A concerted effort was made to identify and preserve surviving varieties and new orchards were planted. As part of diversification, farmers have moved into commercial cider production, and the cider tradition is celebrated and marketed as a heritage experience.

Exports:$NA

Jersey is the head quarters of play.com and other online retailers which offer free delivery on goods such as books, music, movies, gadgets.

Exports - commodities:light industrial and electrical goods, foodstuffs, textiles

Exports - partners:UK

Imports:$NA

Imports - commodities:machinery and transport equipment, manufactured goods, foodstuffs, mineral fuels, chemicals

Imports - partners:UK, France

Debt - external:none

Economic aid - recipient:none

Currency:British pound (GBP). Also the Jersey pound (= 100 pence)

Exchange rates:Jersey pounds per US dollar - 0.55 (2005), 0.6981 (January 2002), 0.6944 (2001), 0.6596 (2000), 0.6180 (1999), 0.6037 (1998), 0.6106 (1997); the Jersey pound is at par with the British pound

Fiscal year:
1 January - 31 December

Taxation

Until the twentieth century, the States relied on indirect taxation to finance the administration of Jersey. The levying of "impôts" (duties) was in the hands of the Assembly of Governor, Bailiff and Jurats until 1921 when that body's tax raising powers were transferred to the Assembly of the States, leaving the Assembly of Governor, Bailiff and Jurats to serve simply as licensing bench for the sale of alcohol. The Income Tax Law of 1928 introducing income tax was the first law drafted entirely in English. Income tax has been levied at a flat rate of 20% for decades.

As VAT has not been levied in the Island, luxury goods have often been cheaper than in the UK or in France, providing an incentive for tourism from neighbouring countries. The absence of VAT has also led to the growth of the fulfilment industry, whereby low-value luxury items, such as videos, lingerie and contact lenses are exported, avoiding VAT on arrival and thus undercutting local prices on the same products. In 2005, the States of Jersey announced limits on licences granted to non-resident companies trading in this way.

Although Jersey does not have VAT, the States of Jersey introduced a goods and services tax (GST) in 2008.

The strategy for introducing the new GST tax was to fill a 'black hole' in the budget that was created by the introduction of a new 0/10 tax that replaced the old tax system that previously exempted foreign investors from corporation tax and levied a 20% rate on Jersey residents. The new 0/10 tax exempts all businesses except those in financial services from having to pay any corporation tax (0%), while leaving the financial services to pay a low tax rate (10%). The income generated from the new 0/10 tax proposal will not be equal to the revenue of the original tax system and this leaves Jersey with a deficit in their budget of several million pounds.

To fill the deficit created by the changes made to Jersey's tax structure, the States of Jersey introduced GST.GST is added to most goods and services, which has raised the cost of living. The people hit the hardest by the new GST will be the people on the lowest incomes, however, to try to prevent islanders living below the poverty line, the States of Jersey introduced an Income Support service in January 2008.

It is arguable that the people who benefit from Jersey's new tax structure are the owners of the large businesses that are separate or support the financial service based businesses. This is because they do have to pay any corporation tax but will still benefit from the island's business. [March 8 2005 Proposition P44/2005: [http://www.statesassembly.gov.je/documents/propositions/14968-27446-832005.htm Fiscal Strategy]

* May 12 2005
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=197 Amendment — paragraphs (a), (b) and (d)]
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=198 Amendment — paragraph (c)]
* May 13 2005 States votes
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=199 Paragraphs (a)(i) and (ii)]
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=200 Paragraph (a)(iii)]
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=201 Paragraph (c)]
** [http://www.statesassembly.gov.je/view_vote.asp?id_number=202 Paragraph (d), as amended]
]

Finance Magazines

"2020 Magazine" [http://www.financeoffshore.com/journal.asp?CentreID=23] is published each November and is the Island's annual personal finance magazine devoted entirely to personal finance and related subjects. It is circulated to every home in Jersey as well as to every business in Jersey, Guernsey & the Isle of Man.

"Global Assets" [http://www.financeoffshore.com/journal.asp?CentreID=21] is an International finance magazine. It is the amalgamation of International Finance Jersey, International Finance Guernsey & International Finance Isle of Man. It is now an online subscription magazine only, circulated worldwide.

References

*"Jersey in Figures, 2005", States of Jersey


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