The States is considering a zero corporation tax rate

The Finance Committee wants to reduce corporation tax to zero, or 10% for some companies, to encourage them to still use Jersey as a tax haven.

It follows the decision of the European Union not to accept Jersey's tax system any longer.

However, the Finance Committee's move will create a �100m hole in the island's budget.

The States is proposing cuts in public sector jobs and services to help cover the shortfall.

If we don't protect our competitive position, then the wealth of Jersey will diminish Senator Frank Walker

This provoked a demonstration organised by the Transport and General Workers' Union on Tuesday, which was attended by nearly 1,000 people.

A former economic adviser to the States, John Christensen, has warned that unless changes are made to Jersey's tax system, the island will become "an overpriced ghetto for the very wealthy".

He said that despite the reputation of Jersey as a wealthy island, there were still many people living below the poverty line.

"The States is dominated by people whose interests lie in keeping the tax haven status," he said.

"Lots of low income and young people are leaving Jersey because they don't see much chance of them getting a foothold in the property market."

There is no excuse for not examining the subject in detail Senator Stuart Syvret

Policy and Resources president, Senator Frank Walker, said zero corporation tax was essential to protect the island's economy.

"If we don't protect our competitive position, then the wealth of Jersey will diminish - and with it our tax receipts which support our excellent public services and enable the public sector to employ as many people as we do," he said.

Proposals by Senator Stuart Syvret to delay decisions on taxation policy until there had been a transparent inquiry into how alternative taxes would affect all islanders were rejected by States members on Tuesday.

But despite the decision, Senator Syvret said members should not ignore alternative tax options.

"There is no excuse for not examining the subject in detail," he said.

"The States hasn't had a detailed examination of these kind of questions so far and we really need to.