MINISTERS have been warned not to deter super-rich immigrants from moving to Jersey – but a politician has called for a block on new high-value residents settling in the Island.
Andy Whelan, chairman of high-value loan firm Oaklands Secure, said that while increased checks and balances on who is granted 2(1)e status could be undertaken, the Island should be encouraging more wealthy individuals due to the ‘trickle-down effect’ of the money they bring with them.
However, Deputy Sam Mézec, leader of Reform Jersey, has questioned that model and said there was little evidence to suggest that a high number of 2(1)e residents brought value to the Island.
He added that he would be discussing with his party colleagues whether to bring forward proposals to the States to cap the number of high-net-worth residents.
The pair spoke out after Chief Minister Kristina Moore hinted that the government was considering squeezing more tax out of a smaller pool of super-wealthy immigrants.
Currently, those offered 2(1)e status pay 20% tax on their first £725,000 of income – totalling £145,000 – and 1% on all income above that amount.
However, the recently released Government Plan is calling for a minimum tax rate of £170,000, with income exceeding £850,000 taxed at 1%.
‘Ministers are reviewing the existing HVR scheme with a view to refreshing the scheme for new entrants,’ the Government Plan states.
And within her ministerial plan, Chief Minister Kristina Moore has suggested that the number of applications will be reduced in the future.
She said that among her priorities will be ‘updating the 2(1)e policy to enhance the economic, social, and benefits to the Island from a fewer number of 2(1)e applicants, while valuing our high-value resident community. This will include a review of available performance data and industry-engagement.’
Mr Whelan said: ‘I don’t know what the political motivation is – I don’t understand what has driven this proposal.
‘Maybe Jersey is not getting the right quality of people applying. My mindset would be that we would want more of them. The majority are value-added people to the Island.’
He added that any suggestion that 2(1)e residents inflated the housing market was misguided, as they were only interested in select properties at the very top of the price range.
‘The high-value properties will be built by local developers – it is pump priming a lot of money into the economy just from the housing perspective. They employ architects, they are paying planning fees. There is a lot of wealth filtering through the economy that is not always easy to identify.’
Mr Whelan admitted that bringing the ‘right kind of 2(1)e’ was important but added that their presence in the Island was good for business and local shops and restaurants.
However, Deputy Mézec – who as a former Housing Minister sat on the panel which reviewed 2(1)e applications – said that ‘there is no version of trickle-down economics that works’.
He added that when he was Housing Minister he regularly ‘expressed concerns’ about some of the applications that were being received fearing they would be ‘negative for the Island’.
‘All of the supposed benefits of the [2(1)e] scheme are purely hypothetical,’ he said. ‘I understand that the government has said they are reviewing the scheme but haven’t given any detail as to what the scope of that will be.’
He added that services provided to 2(1)e residents may be carried out by local firms but often at an higher price ‘inflating it for the rest of the Island’.
‘When I served on the Housing and Work Advisory Group, I consistently asked to see the evidence [of the benefits] and officers never gave it to me,’ Deputy Mézec added. ‘We are in discussions as a party as to whether we want to bring an amendment on this – it is one of the things we are looking at.’
As of the end of last year, there were 184 people living in Jersey who had arrived under the scheme since 2005, while 23 applications were approved during 2021. From 2018 to 2020, an average of 19 applications were approved each year
Deputy Lyndon Farnham, a former Economic Development Minister, said that while he was not opposed to reducing the number of 2(1)e applicants, it was important the new government remembered that the high-net-worth community ‘contributes a huge amount’.
He said: ‘I’m supportive of the move to reconsider the number – it is something we started to do in the previous government.
‘The numbers have started to reduce and we were focusing on being more selective in the process.
‘The 2(1)e community is important and makes significant contributions to the Island. It is about ensuring we are attracting the right people who are prepared to commit responsibly.’
He added that it was ‘vital that we keep the entry criteria at a very high level’ and ensured each application was considered carefully.
