As part of his pre-election statement the new Chief Minister stated that “well-researched and viable initiatives can be encouraged with the input of seed capital. We have to get the message out that Jersey is very much ‘open for business’.” The IoD endorses this view and would urge the new States to look at all possible ways of stimulating the economy and provide a long term growth plan for the Island for the benefit of the community as a whole.
With that in mind, the IoD would like to see Jersey immediately consider a scheme similar to the Enterprise Investment Scheme in the UK to encourage the growth of new businesses, and the expansion of existing businesses.
Jason Laity, Chairman of the Jersey Branch of the IoD, commented:
“In simplistic terms this would provide a tax incentive for local individuals to invest into local trading businesses. Conditions should apply, but it should not matter if the local business was a shop, hairdressers, plumbing firm or a restaurant.”
For example, putting £10,000 of private capital at risk, an investor might receive a reduction in his tax bill of up to £2,000, but the business has £10,000 to invest. It is envisaged that, as in the UK, there would be strict conditions placed on the relief to prevent its misuse.
“This could provide entrepreneurs on the Island, who may have ideas but insufficient capital, with the finance that they need, particularly where support may not be available from the banking sector. A successful business means long term employment, money flowing into the economy and taxation, social security and GST from the owners and the employees.”
Government should also consider the following:
- Encourage employment by introduction of Social Security holidays for businesses employing new staff, even if only on a temporary basis. Also, consider incentives to employ graduates of the Advance to Work scheme or for training apprenticeships.
- Stimulate the construction industry by accelerated capital allowances and tax reliefs for new and renovated properties, which could potentially provide affordable housing.
- Specifically target high growth potential industries such as information and communication technology businesses by direct tax incentives.
- Encourage charitable giving by considering charitable payroll giving to make giving to the “third sector” simpler for both the donor and the charity.
How much would this cost?
“With appropriate safeguards, the right type of relief can multiply many times the spending power of the States pound by partnering it with private capital,” says John Shenton, the chair of the IOD tax sub-committee. “The States will provide funding, potentially by providing tax relief, but the private investor is required to commit much more. It requires private commercial investment and private commercial risk in order to obtain any benefit from the States. Put simply – no investment, no tax relief.”
Category: Finance & Business