Minister defends move to fund spending with ‘windfall’ tax revenue

A “CHALLENGING economic environment” lay behind a decision to use revenue from a new global tax regime as a way of funding its spending, the Treasury Minister has said.

Speaking during yesterday’s States sitting, Deputy Elaine Millar addressed the matter following a question from Deputy Jonathan Renouf, who pointed out that there had been a previous pledge to use the money from the “Pillar Two” regime to replenish the Island’s Stabilisation Fund.

Pillar Two is a global framework brought in by the Organisation for Economic Cooperation and Development designed to stop global companies from shifting their profits around the world to avoid paying tax. With an estimated 1,400 Jersey-based companies being affected, this had been described as a “windfall” for the public coffers.

Deputy Millar said: “The Budget [for 2026-29] was prepared in a challenging economic environment which meant that tough decisions were needed, that included removing the transfer to the stabilisation fund.”

This move, she added, would allow the government to meet ongoing expenditure without raising taxes and making additional cuts to services.

Describing the forecast for pillar two revenue as “prudent”, the minister said that if more income was brought in than the forecast, reserves would be strengthened.

Deputy Renouf said the “abandonment” of the pledge regarding the Stabilisation Fund had been noted by the Fiscal Policy Panel.

He asked: “Is it fair to say that the government has raided every single pot it possibly can just to keep current expenditure ongoing, rather than tackle expenditure itself?”

Deputy Millar said she considered the move to be the best option in the circumstances. “We do not want to increase taxes, nor do we want to cut services,” she concluded.