The proposed 5% sales tax may force some islanders to leave

It has been reported the States will use the extra revenue to help retain the companies which form the island's finance industry.

The industry says it is facing increasing competition with other off-shore centres around the world.

But people living in Jersey say it will be too expensive for ordinary people when the tax is introduced.

A basic three-bedroom house is about �340,000 - who can afford a mortgage on that? Jason Cronin

Jason Cronin, who has been living in Jersey for 10 years, is now planning to leave the island.

Mr Cronin says it is a lovely place to live, but it is too expensive.

He said: "If you want to buy and you've got a family, a basic three-bedroom house is about �340,000 - who can afford a mortgage on that?"

Tax inducement

Jersey's finance industry, which employs about 25% of the island's workforce, says it faces increasing competition from off-shore centres around the world.

Senator Frank Walker, who is a businessman and president of the States policy and resources committee believes in order to maintain the island's leading position, the States must help to encourage companies to stay by lowering taxes.

The 5% sales tax would help to plug a �100m tax gap when corporate tax is abolished in 2009.

A lot of people have come over here and made a lot of money, but they've got to think about the people who live here Oben Lepennick, Jersey resident

Speaking to Radio 4's PM programme, Mr Walker said: "If we sought to retain our existing corporate structures we would be virtually at war with the EU and see many companies disappear to shores where they were more welcoming."

But Jersey-born Oben Lepennick is angry at the proposed new tax.

He said: "A person who lives in Jersey is a forgotten person.

"I was born here and I live here and I'm not apologising for that.

"A lot of people have come over here and made a lot of money, but they've got to think about the people who live here."