The treasury minister decided against the move because of concerns it would cause job losses and discourage investment in the island.

The treasury had wanted to introduce the charge to make up for a predicted �100m tax shortfall following a recent move to a zero rate of corporation tax.

Senator Terry Le Sueur said he would continue to investigate alternatives.

Zero-ten

The Regulation of Undertakings and Development Law (RUDL) has been dropped after months of public consultation over fears the proposal would discourage investment in Jersey.

There were also fears it would have penalised the weaker sectors of the economy and cause cash flow problems for companies.

The RUDL charge was estimated to have raised an estimated up to �7m a year from non-financial, non-Jersey-owned companies.

A report issued in August by the Corporate Services Scrutiny Committee found the RUDL proposals would have meant that from 2009 such businesses would have had to pay an average tax of �500 per worker each year.

Under the zero-10 policy, which sees tax on corporate profits cut from zero for some firms and 10% for others, these companies would no longer make a direct contribution to Jersey.

The States agreed to the new tax system in 2004 in order to keep Jersey financially competitive and to meet EU rules of harmful tax practices.

Mr Le Sueur said he was confident they would have a "workable and effective structure" by early next year.