If approved by States members, the 5% tax could be added to goods and services in Jersey as early as 2007.

It is designed to plug holes in government finances caused by zero-rate corporation tax to encourage businesses to remain on the island.

But Ernst and Young tax director John Shenton said he believed uncertainty over it could unsettle some companies.

Other measures

Part of the reason the zero-rate corporation tax is being introduced is to keep the finance industry in Jersey at a time of strong competition from other offshore financial centres as low tax areas.

Mr Shenton said he wanted to know whether any financial services or products would be taxed with the new levy.

He said that some sectors, such as securities, which were initially attracted to Jersey because there was not such a tax, could be driven away.

The States has been previously told that other measures, such as a capital gains tax or company tax, would not raise enough money to fill the gap and could damage the economy.