Under the measures, allowances for people earning more than �40,000 or more would be phased out.

There is also a bid to get Jersey's richest residents, those in the 11K category, to contribute more.

They would have to pay tax on all worldwide income - not just that earned or declared in Jersey. The States will debate the budget plans in December.

Also under the plans, drinkers and motorists would not pay more in duty on alcohol or petrol, and the controversial vehicle registration duty would stay unchanged.

On Tuesday, the States was told that projected spending for 2005 would be up by just 2.6%, well below the rate of inflation, which official figures put at 5.6%.

Existing 11K residents have an agreement with the Housing Department which enables them to occupy property in return for an agreed contribution to Jersey revenue.

Other residents are not subject to such an arrangement and are liable to pay tax in accordance with the island's income tax laws.