What is the relationship between comedian Jimmy Carr and business tourism to Jersey? At present they are only barely introduced - but things might get much more intimate. To put it bluntly, one could screw the other.
How so? Consider these facts:
- 40,000 people were employed full-time in Jersey in 2011
- 11,700 of these were employed in ‘financial and legal activities’ (yes, that’s right – more than 25 per cent!)
- Total bank deposits in Jersey now sit at around £200 billion (down from the 2008 peak of £240 billion) and the number of funds administered in Jersey have quadrupled in the past decade
- Jersey’s gross national income is £4 billion, of which 40 per cent comes from the financial services sector!
- In 2011, 4,800 full-time staff were employed in hotels, bars and restaurants, rising to 6,150 if you include part-timers.
It could be argued that the difference between the latter two figures serve the seasonal leisure markets so that year-round tourism – most of it business tourism (including meetings and conferences) employs nearly 5,000 full-time people. What happens to the business tourism industry and those 5,000 jobs should the financial services industry wave goodbye to Jersey?
Now clearly not all financial services activity on Jersey is about tax avoidance. But, pray tell, if you are not benefiting from tax avoidance, why would you go to the trouble (and cost) of stashing your wad in a place not governed by either English or Scottish (UK) law?
Now let’s get back to Mr Carr. Clearly between boasting of his predisposition for avoiding funding British public services that he enjoys and his change of heart, he must have had a chat with his publicity manager. I wasn’t there, but you can imagine how it went, can’t you?
“Jimmy, I don’t think it was a great idea to tell the public you duck paying millions in taxes by ‘lending’ yourself money from an account in Jersey.”
“Ah, bollocks, who cares?”
“Your fans – that’s who. The thing about show business”, the PR man might have said, “is that it relies on popularity. An unpopular comedian is a poor comedian and eventually an unemployed comedian.”
Thus did Mr Carr have his Damascene moment.
So where does tourism come into this? If Cameron does deliver on his promise to clean all this up (and it does seem HMRC is eagerly trying to establish the illegality of such activities), several things could happen before it is even started:
1. Our High Street banks and others will distance themselves from Jersey as fast as possible (consider the irony of a taxpayer-owned bank such as RBS using tax-payers’ money to make a profit out of wealthy people avoiding paying tax)
2. The number of bank staff employed on Jersey will evaporate
3. Jersey’s gross national income will be slashed by a reduction in both financial services and consequently tourism revenue streams
4. Hotel occupancy and revenues will fall
5. Hotel and restaurant staff will lose jobs
6. Hotel rates will fall
Since tourism only generates three per cent of Jersey’s Gross National Income at present, it isn’t seen as very important in the grand scheme of things. Yet. Mr Carr’s revelation, however, could be the tipping moment that changes all that.
According to the States of Jersey Statistics Unit, the total net profit (on which Jersey tax is levied) of Jersey’s financial services sector in 2010 was estimated at £605 million. This total represented a fall of a quarter compared with 2009, which itself had already seen a fall of almost a half (47 per cent) compared with 2008. Thus, the total net profit of Jersey’s finance industry had already fallen by 60 per cent in the two years to 2010. What Jersey doesn’t need now is to see its already ailing cash cow despatched to the abattoir because of an ill-considered remark by a stand-up comedian. That wouldn’t be funny at all.
That would be the point when Jersey’s politicians might wake up and decide that having all their eggs in the banking basket was a bit like putting your life savings on England in the Euro Championships. Suddenly tourism, agriculture and a host of other occupations might suddenly seem not only more ethical, but more sustainable.
However, one of Jersey’s most senior politicians has already called for preparations to be made for the island to declare its independence from Britain so it can keep the banking cash cow in the cowshed. Assistant chief minister Sir Philip Bailhache said: “The island should be prepared to stand up for itself and should be ready to become independent if it were necessary in Jersey’s interest to do so.”
Clearly Sir Philip has already made up his mind about which business he would like to keep. The question is, if and when Jersey becomes a legitimate and accepted centre for excellence in the business of tax avoidance, will tourists see it as being quite so attractive? At only 3 per cent of gross national income, I doubt if Sir Philip cares.