Finance tax bills provided early pandemic cash injection

Friday 28 August 2020

A group of finance firms agreed to pay off their tax bills early to help the Government with cashflow in the early stages of the pandemic, it has emerged.

It was clear from an early stage that dealing with the effects of the health crisis was going to strike a blow to the public purse.

As covid nerves hit global markets, the 'Rainy Day Fund' - officially known as the Strategic Reserve - dropped by more than £150m in the early part of this year.

As the Government had to move quickly to invest in crucial equipment and infrastructure to cope with the pandemic, an independent report suggested that the local economy was to contract 6% and the Assistant Treasury Minister Senator Ian Gorst began warning that taxes would likely have to rise in future to fill the hole left in public finances by covid. 

Pictured: At one point, Jersey's economy was estimated to be haemorrhaging £120m a month.

Later, the Government arranged what was described as a "super duper overdraft" of £500m with local banks as a safety net.

Keen to assist with the forecast difficulties on the horizon, a number of finance firms agreed to pay 100% instead of 50% of their taxes In advance to Revenue Jersey as a way of assisting Government with cashflow.

Jersey Finance declined to name which firms had taken part in the initiative, which they said was led by the industry.

CEO Joe Moynihan told Express that this was just “one example of how the finance industry has looked to be proactive in its support of the economy during these difficult times.” 

Pictured: Jersey Finance CEO, Joe Moynihan.

“Alongside advance tax payments and ensuring it has continued to contribute to government finances through payroll taxes and social security contributions, the industry has also volunteered its expertise through Jersey Business to support local businesses where possible, especially small and medium sized firms and it continues to help local charities through volunteering and donations to the Bailiff’s Fund and to other local charities,” he added.

When asked how much of a boost the early tax pay-off provided, the Government said that it would not “comment on the affairs of individual taxpayers”.

Despite initial fears, Jersey has, in fact, fared better than expected in response to the pandemic.

Earlier this month, the Government admitted to Express that just £5m (1%) had been drawn from its £500m safety net, and that the ‘Rainy Day Fund’ hadn't been touched at all.

After dropping to around £750m, the reserve funding pot has nearly returned to its pre-pandemic level of around £920m.