Mark Littlewood, director-general of the Institute of Economic Affairs, said that the UK would do well to copy the success of Jersey in only bringing itself in line with EU regulations when it is in its interests to do so.
He also praised the Island’s low-tax economic model for promoting ‘growth, wealth and opportunity’ and the States’ approach of generating a budget surplus and planning for long-term issues, such as the ageing population, decades in advance.
Writing for the Times’ business section, Mr Littlewood says that the UK should consider following the example of its ‘tiny cousin’, if it wants to create higher incomes and a ‘buoyant’ business economy post-Brexit.
‘In recent decades, Jersey has moved away from being overwhelmingly dependent on agriculture and tourism to become an affluent financial services hub, with this sector now accounting for more than 50 per cent of its GDP and contributing measurably more than half of the tax collected,’ he wrote.
‘Average incomes are getting close to £40,000 per annum compared with less than £30,000 in the UK.’
He adds: ‘The British tax system often seems geared towards squeezing the maximum amount out of the private sector, meaning that it is designed to be highly progressive: the more you earn, the more you pay not only in absolute terms but also as a percentage.
‘The Jersey approach has not been to prioritise higher state revenues above all considerations… The aim has been to attract high-value, low-maintenance contributors to the Island with the objective of further boosting the private side of the economy rather than punishing them for their success.’
Mr Littlewood also credits the Island for being financially ‘prudent’ by putting aside money for the years ahead.
‘Rather than running massive deficits every year not only does it balance its budget, it is building up reserves,’ he wrote.
‘By the end of 2015, the Island’s Social Security scheme had accrued assets equal to six times its annual outlay…
‘This long-term approach is in stark contrast to the UK’s strategy of deciding by default that we will fail to cross this bridge when we come to it.’
And he adds that Jersey’s success in negotiating deals with the EU over the years could provide lessons for the UK.
‘The Island has legislative independence. It is outside the EU’s disastrous agriculture and fisheries regimes,’ he says.
‘Jersey is not obliged to implement EU regulations on issues such as capital movements or money laundering, although it often chooses to do so.
‘In terms of sovereignty, therefore, there are a number of comparisons with the likely constitutional position of the UK post-Brexit.’
He also describes Jersey’s reputation as a ‘shadowy, secretive place to do business’ as a ‘myth’, saying its transparency rating is as high as most EU states, including Germany.
