Both islands face multi-million pound shortfalls in their budgets when corporation tax is scrapped in 2008.

Mr Crowcroft believes red tape in both islands could be cut if services such as the control of food standards and public hygiene were pooled.

He also said administrators in the education department could be reduced.

"I think it's an issue of reducing the numbers in the public sector," he said.

"Most of these savings are done by natural wastage.

"If push comes to shove then cuts are necessary, but I think the public have a right to expect the States to go down this road before introducing new taxes and that's certainly on the agenda for Jersey and Guernsey."