During a Government Plan special briefing on Friday afternoon States Treasurer Richard Bell and other high-ranking civil servants outlined the extent of the economic damage that had been caused by the coronavirus pandemic.
The session was the first of two parts of a briefing on the plan, which outlines government finances for 2021 to 2024 and which was due to be published in full at midday today.
Limited detail was provided on how the government might seek to address the looming deficit in public finances but it was revealed that numerous reviews of the Island’s taxation systems were taking place.
Examples include work being carried out to assess the taxation of vaping and medicinal-cannabis businesses, as well as a review of stamp duty and GST regimes.
Officials also gave a glimpse of what can be expected in the Treasury Minister’s budget for 2021, which is due to be debated before the end of the year.
There was good news for the hospitality industry and drinkers with proposals to freeze alcohol duties. But cigarette duties are due to rise by 5% plus inflation.
Meanwhile, the government will drive ahead with its efficiencies programme, with £12 million of recurring efficiencies that were not achieved this year being added to the existing target of £20 million for 2021.
Altogether £120 million of efficiencies are now being targeted by the end of the Government Plan period in 2024 – £20 million more than originally planned.
Government chief economist Nick Vaughan said that Jersey’s economy was now predicted to be 5% smaller by 2024 than previously expected because of the crisis.
He added that the Fiscal Policy Panel, the government’s independent economic advisers, had recommended that the Island should aim to settle any deficit created by the crisis by the end of 2024, albeit in a careful manner to avoid worsening the recession.
‘Like any sensible fiscal authority, they do not recommend that you balance your books in the middle of a recession because that would only make the recession even deeper,’ he said.
‘You don’t cut spending and raise taxes when you’re in the trough, but there is a structural deficit and, by structural, we mean a deficit that would be permanent unless you do something about it.
‘That could be a consequence of the recession but that deficit should be closed as the economy recovers. So the FPP have made this judgment that we should aim for a zero deficit by the end of the 2024 period.
‘But, importantly, you need to see how things play out. So if the economy is weaker then you would want to slow down the pace of your fiscal consolidation, and if it was stronger then that might give you the option to balance your books a little quicker.’
JERSEY’S FORECAST DROPS IN REVENUE PER YEAR DUE TO COVID-19:
2020: £96 million
2021: £115 million
2022: £99 million
2023: £85 million
TOTAL: £395 million