Contribution of high value residents discussed

More than 260 industry leaders from business, finance and law have held a meeting to discuss the role high value residents play in Jersey's economy.

Jersey's high value residency programme grants residential status to highly skilled and economically active high net worth individuals.

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

However, one former economic advisor to the government described the tax contribution of high value residents as "piffling".

About 260 families currently live in Jersey having relocated through the scheme.

O'Keeffe who runs Mary O'Keeffe relocation to help high value residents settle in the island said they contributed a lot to the economy and philanthropic causes.

"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."

High value residents pay a 20% tax rate on the first £1.25m of worldwide income.

They then pay a 1% on any income above £1.25m and there are some who feel these individuals should be paying more tax.

O'Keeffe 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."

Garry Bell, a tax advisor to high value residents, said if tax for wealthy individuals was increased he believed Jersey would lose them.

He said if the money they made above £1.25m was taxed at 20% instead of 1% it could damage the economy.

"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 advisor to Jersey's government in the 1980s and 1990s was critical of the High Value Residents programme.

He said the amount of 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."

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