A support package of more than £150 million to boost the economy in the aftermath of the COVID-19 pandemic has been unveiled by the Government of Jersey today.
The measures that have been endorsed by the Council of Ministers are:
- Direct payments to low-income households: £1.3 million
- Islanders to receive £100 to spend in the local economy: £11 million
- Reduction to employee Social Security contributions: £26 million
- Extended time to repay GST and Social Security deferrals: £40 million reduction to revenue in 2021
- A Fiscal Stimulus Fund: £50 million
- The abolition of Prior Year Basis payment of tax: £18 million (further details to follow next week).
The Fiscal Stimulus Package has been drawn-up as the short-term impact of the pandemic on the economy has been significant, with the Fiscal Policy Panel (FPP) forecasting that output in Jersey’s economy will fall by 6% this year.
At the start of the global pandemic the Government rolled out several economy-protecting measures, based on FPP advice, including the deferral of GST and Social Security contributions, and the introduction of the Co-Funded Payroll Scheme.
However, Jersey, like other countries across the globe, is experiencing a sharp downturn in output, income and employment and so a large increase in Government spending and revenue measures are needed to support and stimulate the economy.
The Minister for Treasury and Resources, Deputy Susie Pinel, said: "It is vital that the Government supports Jersey’s economy and businesses which have been severely affected by the unprecedented COVID-19 pandemic. This £150 million recovery package is designed to kickstart our economy by encouraging spending in the Island.
"Recovery from the long-lasting effects of the pandemic will take time, but this Fiscal Stimulus Package stands us in good stead to ensure that when we emerge from COVID-19 our economy is in a strong position."
Direct payments to low-income households:
About 13,000 Islanders from low-income households will receive a £100 payment by the end of July. This measure is targeted at those Islanders who need it most.
Payments will be made to working-age Income Support claimants (6,300 adults and 3,400 children) and pensioners on Income Support and Pension Plus (3,300 Islanders).
Reduction to employee Social Security contributions:
The Council of Ministers is proposing to temporarily reduce employee Social Security contributions from 6% to 4%, up to the Standard Earnings Limit of £4,558. This measure, if approved by the States Assembly, would run for nine months from 1 October 2020 to 30 June 2021 and would increase the take-home pay for approximately 55,000 workers and self-employed Islanders.
Extended time to repay Social Security and GST deferrals:
Businesses will now have two years to repay deferred GST and Social Security payments instead of one. It is estimated that deferral of the first two quarters’ Social Security contribution is up to £50 million while GST deferrals will be up to £30 million.
The Social Security Minister, Deputy Judy Martin, said: "This package of measures is welcome as it will benefit all Islanders and particularly those who may have been struggling during the pandemic. Since the start of COVID-19 we’ve been keen to support businesses and Islanders and we’re now continuing with this significant package to boost the economy."
Spending in the local economy:
In September all adults and children – an estimated 107,800 Islanders - will receive £100 to spend in the local economy. The scheme is still being developed but could potentially be a voucher or prepaid card that can only be spent in Jersey. This measure will cost approximately £11 million.
Fiscal Stimulus Fund:
A £50 million Fiscal Stimulus Fund will be launched that will be open to bids from Government departments and arms-length organisations for projects that will deliver stimulus to the economy quickly. Bids can include conventional capital projects and schemes for skills and training. It is expected that the projects will start by the end of this year and be completed by the end of 2021.