Treasury minister stands firm on plans to scrap relief

TREASURY’S desire to scrap mortgage interest relief is ‘settled’, the department’s minister has said.

TREASURY’S desire to scrap mortgage interest relief is ‘settled’, the department’s minister has said.

Deputy Gavin St Pier yesterday poured cold water on suggestions from Treasury board member Mark Dorey that the plan was merely an ‘idea’ at this stage.

Deputy Dorey had claimed, while speaking on the BBC Radio Sunday phone-in, that the Budget made it clear the department’s intention could change following a review it will conduct next year of all taxes the States imposes on islanders.

But Deputy St Pier, pictured was sticking to his guns.

‘Is our view on phasing out mortgage interest relief likely to change? I think our view is settled but I think there is quite a lot of detail around it [that needs to be finalised], in terms of timeframes, how you recycle the taxes raised and whether you should do anything else for first-time buyers.’

Comments for: "Treasury minister stands firm on plans to scrap relief"

vincent

1) So you dont care what the PEOPLE of Guernsey think?

2) The states should have been doing something to help first time buyers a long time ago! A lot of young people are leaving the island because its just not affordable!

I dont understand how the states just plod on without listening to ALL AREAS of the local public. All they seem happy to do is keep the rich happy, and dont care if the rest of us suffer....

Rant over!

Radical

So GSP's view is settled despite not knowing when to do it, how to do it, what effect it will have on our economy, how the funds will be redistributed and before the targets for the states cost cutting excercise have been reached?

What a shambles. I can only hope the Deputies listen to the people on the 12th December.

markB

yes do something for first time buyers at least!!

Phil

Surely this headline should read "Minister stands firm on political suicide"?

Any deputy that votes for these proposals may as well not bother standing in 2016 (provided of course that there is sufficient competition for places). The people affected most by this policy will be people that vote, and the children of people that vote. I can't think of anything that would be less popular amongst the electorate that actually bother to get themselves to the polling booth, unless of course one of our equally intelligent deputies comes up with a policy such as "Paedophiles to be sent to Butlins instead of prison".

Gavin, how much would removing the upper limit on social security contributions bring in? Let's face it social security is a tax not an insurance contribution, as well as removing the upper limit you could also propose merging the department with income tax, thus saving millions in salaries and pension contributions. That may of course upset the higher earners (such as yourself and your friends) and also the civil service, so I shan't be holding my breath awaiting its implementation.

John

@ Phil

The upper limit on social security has just been raised, for 2013, by a large amount which means that those people affected will be paying about £75 extra SI per month or £900 per annum.

This directly impacts a number of people who probably, rather ironically, have private health care and are therefore in effect doubling up their payemnts.

However I am in total agreement with yourself and other contributors on the mortgage relief issue. The people who will really be affected and impacted will be the lower and middle income earners.

I would rather see the upper limit on SI contributions raised again or abolished as this hits the people who can afford it rather than those who really need the mortgage relief in order to afford a house in Guernsey.

Phil

John

I'm aware of the limit being raised, but I'd like to see it abolished altogether. For instance, a senior advocate with earnings of £1m p.a. (there are plenty of them around) would see their contributions rise by just over £50k a year, which wouldn't make much of a difference (if any) to their lifestyle, but would come in very handy as general revenue. I also think social security should be paid on all income, whether earned or unearned, in effect it should be exactly the same as income tax, which would mean a far simpler system and one which would require far less collectors than currently exist between the two states departments.

a voter

I may be wrong, but I think social security contributions go into a ring-fenced fund (under some law or another) and so money collected can only be used for the purposes specified in that law (social / health stuff presumably) and so is not available for general government spending.

Whereas income tax goes into the general coffer and can be used for any spending type.

Not disagreeing with your comments, but just highlighting that the two I think are not interchangeable and so if MITR was kept and social security contributions increased for high earners, it would send the extra money to the social security pot (which may be no bad thing as I think that fund is running at a current deficit).

PLP

Phil - did you notice that on another thread Deputy St Pier mentioned that the planned reduction would only really start to affect most mortgage holders in 2016.....nice timing!

Slash

Phil

Seems like the Ginger Ninja is sticking to his guns here, let's see if he has the spherical objects to tackle the civil service pension scheme after the review comes out next month.

Spartacus

Gavin St Pier is showing us what he's made of and I'm impressed. I sympathise with any who may need to adjust their fortunate lifestyle to this new circumstance but really it's about time somebody started making some tough decisions to address inequalities.

You would have to be pretty well off and have a hefty mortgage for this to make a significant impact on your finances. Time to reconsider the lifestyle choice of being mortgaged to the hilt.

Bring on the review of taxes and benefits, long overdue.

notsostoopid

Here you go again, you should change your name to 'The Mole'.

Radical

@ Spartacus

Why would anybody want a hefty mortgage? Who decides that paying a huge amount of interest to banks over a lifetime is a good idea? You seem very far removed from the realities of the housing market in Guernsey - it is not a choice to be mortgaged to the hilt, it is the only way you can escape extortionate rents and try and get a house large enpugh to be able to raise a family. Nobody I know in my age bracket has any choice about how much they borrow - everybody has to borrow as much as they can unless they fancy spending their lives in a bedsit.

Please tell me the alternative because maybe we have all been missing it and you seem to have the answer.

You also seem to assume that those that have hefty mortgages are well off - I would say they are much less well off than those living off benefits who have no debt - should we all go down that route because I am certainly tempted.

Last thing - you talk about inequality - who should benefit from the £8m redistribution?

Spartacus

Radical

I have a mortgage and family, I have benefited from MIR but I never depended on it. That would be foolish and poor financial planning.

What is "a house large enough to raise a family" ?

Plenty raise families in small flats rented or owned. Many spend their hardworking lives in a bedsit. You are talking about luxury subsidised by those living in flats and bedsits.

I have the answer for me, I will need to look at where I can find savings, but we have done this numerous times since circa 2008. Hopefully we will benefit in some way from redistribution, so some of our own FTP savings will be a bonus.

There are plenty of personal finance books out there and they all say the same thing.

1) Make sure your income always exceeds your outgoings.

2) Pay attention to your assets

3) Have savings, emergency fund, pension etc.

4) Plan for every foreseeable scenario so that you are prepared for any nasty surprises which are a fact of life.

This is our personal responsibility, not Gavin St Pier's responsibility.

Spartacus

I forgot the most important one!

ELIMINATE DEBT AS FAST AS POSSIBLE!

Radical

Thanks Spartacus, I quite enjoy some of your views on education but I disagree with you on this matter.

I don't think we should be aiming as an affluent and modern society for people on this Island to be raising families in bedsits. Families aiming to own their own family home is a resonable expectation if you are prepared to work hard and sacrifice other things. If I never stretched myself financially to buy my first house I would be stuck renting or more likely would have joined the exodus of young people leaving Guernsey. According to your personal finance advise very few people would ever be able to buy a house in Guernsey. They would all rent and the beneficiaries of that would be the rich landlords who would be rubbing their hands. It seems at odds with your clearly socialist ideals.

The points you raise about how to manage finances are fine in theory. Reality is different for young people getting onto and staying on the housing ladder today and I think you don't fully appreciate the problem people have with regards to housing in this Island. MIR is just the tip of the iceberg, taking this away will cause a lot of people a lot of pain, and when people get hurt they get angry and divisions in society start forming which is what we are starting to see in this debate.

notsostoopid

Spartacus

Do you never read behind the lines, and also, to go with your expert knowledge of Education, your obvious expert knowledge of the Finance, Housing and Tax Industrys makes we think your name may have been on the voting slip that I spoilt at the last election.

What do your friends (If you have any) think of your opinions on these subjects.

Start writing about the bigger picture, not just the blinkered way in which you see the world.Some of us are on minimum wages you know and cant afford our own places now, let alone with 2500 a year on top.

Spartacus

Radical

Reality is due to existing division in our society some ARE raising families in bedsits. The aim is to change that surely.

I agree you need to stretch yourself if you want to be a home owner but you should not rely on government policy to support that aspiration at the expense of others.

I had to wait til my thirties to get on the housing ladder, at great sacrifice. Same with many I know of all generations. I do understand the difficulty but its not meant to be easy and indeed it isn't easy anywhere in the world.

Guernsey has made it easier by MIR which was a daft policy to begin with and house prices are now silly because of it.

I was reluctant to get stuck into this debate and as usual the same old culprits are hurling abuse at me.

I'm an idiotic Roman troll! lol.

I think the policy is sound although the States might have to look at amending it and reach a compromise to appease the protestors. But I think the backlash against T&R's proposals and Gavin St Pier in particular are unwarranted.

Spartacus

notsostoopid

Thanks for the compliment but my name has never been on a voting slip and I avoid discussing politics.

You are not entitled to own a house but if government policy disadvantages you in any way I would support any policy which aims to change that.

Toolbag

Hey Spartacus, I thought you were a Thracian not a Roman?

Gilthead

Spartacus - so addressing inequalities is taking more from people already struggling and giving it to the bloated and wasteful civil service and those that can't be bothered to work eh?

You really do talk utter tripe.

Spartacus

No you are talking tripe. I said nothing of the sort.

Gilthead

By inference - yes you did.

Spartacus

Absolutely not.

Savings should be redistributed to all who are deserving.

Gilthead

Like who exactly?

Spartacus

People who are struggling per you post at 10.48am. But not just homeowners.

forest

He certainly IS showing us what he's made of Spartacus.

And you're 'impressed' by a man who is now breaking his manifesto promises.

Why am I not surprised.

Phil

More idiotic comments by the Roman troll.

"Adress inequalities" as in scrap the civil service pension scheme, get teachers to work full time hours etc etc.

There's an enormous amount of fat to be trimmed from our bloated public sector, time the knife was wielded I think.

mortgaged

Spartacus-way to go, about time somebody spoke up for the tough decisions that are needing to be made.

Disallusioned

Er...This saga is getting evermore confusing. Deputy Mark Dorey has many years (16?) of experience in several departments and has sat on Policy Council as a Minister in charge of Social Security, he is very intelligent, not afraid of speaking his mind and is very rarely proved wrong. He knows how the states members work, he knows how the civil service works and he reads his Billets thoroughly and most importantly, understands the content. If he is at odds with his Minister I know who will be proved correct in the long term. Deputy St.Pier has been a States Member for how many weeks ? Those that THINK they know are most aggravating to those that DO know; so, Dep. St. Pier, try taking some advice from the people around you that DO know.

Portlandgrey

Gavin, please reread your manifesto pledges:

"I will oppose the introduction of new taxes (direct or indirect) until we are satisfied that we have - where possible - eradicated waste and inefficiency in public spending."

Either you have a very short memory, or you fail to grasp the meaning of your own words.

The voting public that enabled your pagssage to the States on the back of your pre election promises are right to feel cheated.

Rolf

If property prices were as low as some parts of the UK, I could understand some of the logic behind this. Truth is though, they're not, especially with the shortfall on local housing supply and demand.

It might be worth looking at this scenario for multiple buy-to-let investors, but to penalise hard working families and first time buyers is, to quote Phil, a short road to political suicide.

Forest

Gavin you have now confirmed to all of us that your pre-election promises are entirely empty and void. I suppose it really was too much to ask that a politician could actually do what they said they would once they were elected

That aside. The 12th of December will be a fine morning to join the thousands of other islanders on the steps to meet you and cheer you on.

You should speak to Tony Spruce on that one, he might be able to give you some top tips.

notsostoopid

Oh dear Gavin, I wonder if you knew 6 months ago that you were going to become the most disliked man in Guernsey, since you have been in the States, you have broken the story of your own incompetant department losing 2.6m, and within 4 months managed to push something that will make us, the normal people pay for it.

I hope you cannot sleep at night.

Young homeowner

Spartacas

"You would have to be pretty well off and have a hefty mortgage for this to make a significant impact on your finances" - If I understand it correctly the cap for mortgage relief is being dropped to £350k. Please do have a look at any of the local Estate Agents websites and take a look what you can get for £350k. Barely a house, some flats are even £350k. Although £350k is a huge amount of money it wont get you very far on the property market in Guernsey.

Young couples and family's cannot afford housing in Guernsey as it is and I am shocked and disgusted to find that not only are Guernsey Politian’s not making it any easier for first time buyers and young homeowners, there actually making it harder!!

My partner and I spent years saving for a deposit and legal fees and still had to get help from family. We have been lucky enough to just buy our first home but if it wasn’t for the tax relief on our mortgage we couldn’t afford the mortgage payments so what do you suggest we do GSP?

Open your eyes! You will be left with no young people at all! And after all you need us young people to pay for your pensions before the pot runs out don't you?

Spartacus

Young homeowner

You have explained exactly why the meteoric rise in house prices we have seen is such a disaster and must be stopped.

You will have to review your finances and make decisions. While you are at it, consider the impact of other variables and think about whether you have over extended yourselves for the sake of a nice house. Or did you sensibly opt for a tiny flat as a first time buyer?

forest

God you really are trolling on this one Spartacus.

bcb

Are you saying that house prices are as they are because of this tax relief? are you now an expert in the property market?. Did you not listen to the estate agent on the radio along with what just about every other poster is saying on here?.

Read PLP`s post as it says it all really and you are impressed with Gavin? I really feel you have let yourself down on this one Spartacus in supporting him with what seems to most an attitude of not listening to what people are saying including many who will not be affected by this and his lack of ability to look at the wider picture which is evident in his rather feeble posts on here.

He is to focused on one aspect of this tax relief and stuff the consequences i.e. people struggling even more than they are now and you seem to share that view.

As for financial planning, many many things can happen over the life time of a mortgage that cannot be planned for and dropping bombshells on people at a time when things are already getting more difficult shows what a foolish and inconsiderate minister this has turned out to be.

Should we scrap tax relief for people who have children (it`s their choice to have them) as surely that cant be fair and is a subsidy at the expense of those that dont?.

Spartacus

bcb

I'm impressed that Gavin and his board have made a tough but sensible decision and stood by it.

Politicians do listen to what people say but there have been many loud voices for years speaking out against the division in our society and the gap between rich and poor, and inequalities. That is the wider picture.

Now it's the turn of the middle classes to complain about something which has been taken for granted for far too long. What some homeowners think of as struggling is missing the odd holiday to be able to afford school fees or a new kitchen. Some are simply in fairy land if they believe they need or deserve taxpayer support.

As Dr Bridgman explained there are thousands in Guernsey experiencing real hardship, and not because they have overextended their borrowings, but because their wages are low and cost of living is high and their taxes are being paid out to people with mortgages.

PLP

Deputy St Pier needs some lessons in public relations.

If this plan is to implement the reduction as part of a wider tax review (with possible compensatory benefits for those affected) he would have been better to not mention it until that review and policy was fully developed, and then place it in context.

Instead he drops it like a bombshell with minimal explanation and wonders why people are up in arms.

hobbesvlocke

A number of things strike me about this debate:-

1) Almost everyone who expresses an opinion has a vested interest.

2) Hard working home-owning tax payers are surprised to find that instead of them contributing positively to the deficit they are in fact in receipt of an £8m subsidy which forms part of the £31m forecast deficit.

3) The language of those who are angry at seeing this benefit removed is the same understandable language of fear used by people who claim other benefits. As a mortgage holder myself, those arguments resonate with me but not enough to keep it.

4) It’s almost impossible to argue this on the grounds of fairness even though it is a patently unfair subsidy. This is because everybody has a different idea of fairness. Also a common argument seems to be that because there are other areas that are unfair, why address this one in particular. This means unless everyone can decide on what is fair on everything and sort it out at once, we should do nothing. I’m not sure that works as an argument.

5) It maybe better to argue that this subsidy be phased out because, self evidently we can’t afford it at the moment.

6) A lack of support by Policy Council members (presumably they saw the budget before we did) means that the vacuum is filled by mainly by those who oppose it. Why the silence from other big-hitters?

Make no mistake, in Guernsey, if you can afford a mortgage you are way ahead of the game. There are many people working very hard for whom home-ownership with or without MIR is an impossible dream.

On balance,I support the phased abolition of MIR. More so if it comes with a commitment to build more houses (and perhaps restrictions on multiple ownerships) which in my view is the best way to make houses affordable for those who wish to make the sacrifice to own one.

jamie

AGREE 100%

I have a vested interest (single income household, fair / average sized mortgage)but can see and totally agree with the logic in removing this relief.

I guess I could look at the tax relief I received last year as paying for the family holiday ... is that what it is meant for?

Have to also agree post 14 below by SL. Always very dangerous for governemnt to interfere with market forces. they have effectively been inflating land value (for the benefit of the few) by the value of interest relief given every year since it was introduced. Contributing significantly to the pace at which housing has become unaffordable for the masses.

We should also bear in mind the contingent risk that the states takes on with our tax contributions by continuing this relief. If interest rates rise then the value of relief will be significantly higher than 8mil, easily doubling or tripling from where it is at the moment. What should we do if that happens? - cut services to allow the minority to continue getting their subsidy / family holiday each year ?

Terry Langlois

very good post - and a good reply from jamie.

as a beneficiary of MIR, I agree 100% and think that it should be phased out.

the people who benefit most are those with the biggest mortgage. why should they benefit at the expense of the less financially fortunate who cannot afford to buy and live in rental property?

If you want to help first-time buyers, remove document duty from lower value properties or for first-time buyers. At least then the impact on States revenue is more certain, unlike MIR which will rise massively when interest rates do eventually rise, as jamie says.

By starting to reduce MIR now while rates are low, the financial impact on taxpayers will be minimal and people can plan their affairs.

Dave Jones

hobbesvlocke

I would just pick you up on one point in your post and that is about Policy Council members. I don’t think there is a vacuum and it is also not unusual for PC members not to comment on individual proposals in the Budget.

For myself I am not opposing the move because I think it is very difficult to argue, that this is a tax subsidy not available to others in the housing market and as Housing Minister I spend my life trying to level up the playing field in housing tenure and affordability.

What I have said on this issue, is that, if this mortgage tax relief is unfair to other taxpayers, then hammering home owners through TRP is also equally unfair (a 50% increase over the last 3 budgets) as TRP is also a tax.

I also want to see what is going to be done to help reduce the cost of private rental and to help first time buyers before we phase out other subsidies available to help those who want to own their own properties. I did support more financial help for those struggling with housing costs in the private sector in March this year, unfortunately the outgoing States did not and I am therefore eager to see that set of revised proposals back before this new States before we make more radical moves in the mortgage market.

My biggest fear with this suggestion from T&R, is the creation of negative equity for those families already on the ragged edge, some with uncertain employment futures to boot, which could leave them even more overstretched possibly to the point of them loosing their home and that would be disastrous for them and us because we would then possibly have to house these families.

I would also like to evaluate what is going to happen to mortgage interest rates over the coming months and years. If there are any unintended consequences lurking in the wings, then I want to know what they might be and taking a little time to think the removal of this subsidy through, is no bad thing.

hobbesvlocke

Cheers Jamie. Your point on contingent risk is well made. Likewise Terry – Nice one. As you say, if Gov’t is planning to phase out MIR now is the time to do it.

Dave Jones. My PC vacuum point re MIR was, of course, unfair on you. You were, as with most political matters, ready to commit your thoughts to print in a timely fashion. It is much appreciated.

MIR has significant cultural and philosophical aspects to consider as well as the fiscal issue itself. To effect change in these sorts of areas needs strong communication and leadership from the top. It perhaps needs more than a couple of senior voices to speak to the electorate on this one.

My own feeling (probably incorrect) is that a couple of bruising recent private members bills on strategically unimportant matters has contributed to reduce the time available to make a strong case for more fundamental policy initiatives.

PLP

Dave Jones

Do you think it is time to seriously consider imposing limits on the amount of residential property that can be owned by non-principal residents?

Also, what are your thoughts on a rent cap, linked to the TRP value of a property.

In terms of interest rates, as they are at a historic low - in the words of a song from my youth surely "the only way is up."

Dave Jones

PLP

I do in fact And I will be putting forward in the coming talks on a new population strategy the idea that nobody without strong family or residential connections with Guernsey should be allowed to own property on the Island.

On the issue of a rent cap in the private rental sector, this is a tricky one. We want to keep rents at affordable levels but at the same time we do not want to drive people who rent property out of the market because they can't get a decent return on the investment they have made in that property.

I would like to see something like a banding system linked to minimum standards which had a maximum rent band for a specific type of property with varying amenities available to the tenants.

But like I say we have to be a little careful what we do, simply because if to many property owners decided to sell their properties for private housing because renting no longer made any financial sense, the States would struggle to cope with all the people who needed to be housed.

Dani

Dave Jones

Thank you for attempting to deal with Richard Murphy on his blog. However he is going too far elsewhere.

He is saying we are not a democracy and that we are going to get into financial trouble and look to the UK for money to support us.

http://www.taxresearch.org.uk/Blog/2012/11/23/guernsey-admits-it-is-in-the-black-hole-i-predicted-in-2005-jerseys-still-in-denial/#comments

This issue needs to be addressed. He cannot be saying such untruths.

Jamie

Dave Jones,

I'm not absolutely sure how I feel about a deputy responding unilaterally on Guernsey's behalf regarding this FATCA issue especially when you incorrectly compare it to EUSD which is not the same (hence why RM picked you up and beat you down on this).

I fully appreciate someone fighting Guernsey's corner but responding to external bodies (IMO) should not be undertaken by a single deputy whilst surfing the net, but by the states in a more formal thought out way (and with a full understanding of the facts).

I know RM is just a tin pot accountant with views verging on the extremist but he does have the ear of some (equally extremist)government figures as well as the press. I can just imagine the national press on Monday "Son of Fatca - Guernsey officials don't understand it"

Shane Langlois

The negative reaction to T&R’s proposals do not take into account the fact that mortgage interest relief is just a mechanism for using general revenues to gear up land values. The tax relief is absolutely the last thing a small island, transitioning from a horticulture to a financial services based economy, needed over the last few decades. Some have benefited but they certainly are not today’s first time buyers. The tax relief got built into land values soon after it was introduced and ever since has acted as a price accelerator. Unwinding this disastrous intervention in the market by the States can only be done over a longer period than T&R are suggesting if it is going to be pain free for those struggling to service a mortgage but unwind it we must.

If we genuinely want to help those trying to buy their first property there are more targeted measures we could take; scrapping stamp duty on property purchases for first time buyers, extending the shared ownership scheme and addressing high conveyancing costs.

forest

Hi Shane.

I can't speak for everyone else but my view is this.

The SOG must get their own house in order BEFORE they hit us with more costs that we can ill afford. You know that deputies have not got the civil service under control - infact it is the senior civil servants that are in control of deputies, which has so clearly been demonstrated on several occasions when deputies haver tried to uncover or ask 'difficult' questions of them.

The SOG is allegedly committed to the FTP but that has been filed in the 'too difficult' tray and if HSSD's overspend on consultants is anything to go by last year, spending appears to be increasing.

Wastage is rampant in the CS and until it is bought under control any revenue streams that are introduced will simply be consumed by an already bloated civil service. For example. HSSD and SSD overspent by 4million so even if the states was taking the full 8 million revenue from removing mortgage relief today half of it would have already been spent.

I rest my case.

Dave Jones

Dani

I am happy to take him on .he will get fed up shortly and do what he always does and refuse to post arguments that appear to take his apart. He is free to rant all he wants; it is just wishful thinking on his behalf.

When the Chief Minister and I were in Westminster for a meeting at the House of Commons a couple of weeks ago, Murphy's name came up and people just smiled, he is not taken seriously in that place and is seen more as a communist than anything else.

Most of the predictions he makes fall flat and even in the end if there is automatic exchange of information by agreement, we will still continue to prosper. There is still loads of legitimate business in the financial world and while we remain a low tax jurisdiction we will always be attractive to those with funds to invest and that is one of the things Murphey hates, he wants a global tax rate at EU levels with no options for anyone to find a better rate elswhere.

Dave Jones

Jamie

Guernsey officials do understand very well what is being discussed. Which is why the Chief Minister and External relations officials are responding to press and media enquiries on the subject? So I am not responding on the issue unilaterally. And the media are unliky to majke the comment you have posted because of those interviews.

The point I was making on the EU savings directive is that we have been cooperative on that issue but I have NEVER agreed on automatic exchange of information for all the years I have sat around the ERG table.

Are you saying Jamie that I should only agree what is being said officially, what kind of democracy would that be? I tell it as I see it and I have always done so, people are free to disagree which is what I thought was the point of these blogs.

When I post I am posting my own personal views. I have long been an adversary of RM and when he looses the argument he just closes down the blog.

He assumes that everyone in high places agrees with him and listens to what he says, I can tell you that is not true, many for instance in the all part group in Westminster agree, that we are a well regulated jurisdiction which is on the worlds white lists and we have to correct people like Murphy at every opportunity.

I make no apologies for going on the attack I love this Island and will defend it and its right to exsist as a self governing autonomy to the bitter end.

Jamie

Let me re-phrase that slightly....

Of course it's your democratic right to have your own opinion but my opinion is that when representing the Island (in any capacity)you should only convey what is being said / agreed officially (whether you agree with it personally or not).

I can only say that I was deeply disappointed to see you even try to engage with that nutter RM, let alone make it clear that you also acted in an official capacity for Guernsey by making reference to the housing department etc. It wasn't really clear that the opinions you were expressing were yours and not the 'official' Guernsey view.

Ray

Have to agree with Jamie

Any pronouncements by a Guernsey Deputy will be always be jumped on as the official line

That man Murphy is very practised in twisting words and sentences to mean totally opposite of their original intent

Best left to the relevant Committee Minister to respond or better yet just ignore the idiot

Dave Jones

Jamie

I have always given my views in whatever capacity I have held in life, from my days before joining the States until the day when I leave. The official line will always be given and I support those efforts and have not contradicted a single statment that has been made.

Do I believe we should stand up for ourselves and our right to run our affairs as we see fit, then you can bet your life I do and I will tell anyone who will listen, I refuse to let people like Murphy get away with some of the staments he makes and I might remind you many of the people who voted for me have told me that one of the reasons they did is because I am not afraid to speak up and I can assure them that won't change.

Dave Jones

Ray

I won't keep quiet just so we don't upset someone who has been described by you as an idiot.

GM

Ray

He's also "Arnald's" hero. Most of his info on Guernsey is fed to him by Arnald, which explains rather a lot. He's more accurate re Jersey as he has a few more balanced and accurate comrades there who don't blog as though Nursey hasn't been round with today's tablets yet.

Ray

Dave Jones

Not saying for one minute that you are not right but sometimes bull in a china shop diplomacy has the opposite of the intended effect ....

"Softly softly catchee monkey"

Tiger

Very disappointed to see the vitriol and ugliness of some of the posters on the various forums on this issue. The level of self interest does not reflect well on the island that so many people are getting so upset at thought of losing this relief - bearing in mind that after the generous personal allowances available the majority of peoples effective income tax rate is still well below 20%. Try living in the UK and paying 45% and see how that compares.

Dave Jones

Dani

This might interest you; and is what Murphy and his ilk want for us. It comes from the UK Business Forum.

One recent study even went so far as to demonstrate that out of every £100 earned that after 10% is taken in National Insurance and a further 22% is taken in Income Tax (Or a staggering 50%, following the recent Budget if you are a higher earner), that out of your original £100 only £68 remains. Not only that but the study went on to demonstrate that the average person spending their £68 in every hundred goes on to pay an average further £32 to the taxman. Not unrealistic when you think of 17.5% for every high-street purchase or meal out, 35% of your well-earned drink and a staggering 85% of the money you spend on petrol all going to the tax man! Therefore of the £100 earned, the average person has only approximately £36 in goods and services to show for all their hard toil, and only approximately £21 worth for those on a higher income.

I find that statement from the UK Business Forum quite staggering.

So a message for Mr Murphy, we have absolutely no intention of becoming like the UK or the rest of Europe that is in financial turmoil with soaring unemployment, unrest on the streets and thousands of people loosing their homes.

So you can bluster and preen yourself all you want in your headlong rush to turn every jurisdiction into some sort of communist state, where the only choice is the one the State lets you have.

Our islands will still be prosperous long after the EU and TJN have imploded on themselves like all fascist organisations it is only a matter of time.

Dani

Dave Jones

I do find that interesting. VAT has gone up to 20% now too making that high street purchase more expensive.

I also find it annoying that he says he believes in free markets but as you say he does not like jurisdictions with different economic set ups. It's quite contradictory.

I find it even more annoying that he keeps calling the VAT issue an abuse. Even though the judge said there was no abuse whilst it was occurring which gives a misleading impression as he still refers to the period where it was perfectly legal as an abuse.

I don't think it would be a bad idea to look into having someone working on our PR issues and deal with the rot that is said. There is so much misinformation out there I think we could present ourselves better.

Socialman

A rise in social housing applications? and more people leaving the island lowering the tax income? just a thought.

young peoples lobby group guernsey (YPLGG)

It is time the middle aged and young people of Guernsey start getting fair representation in our political system. Is it a coincidence that the one Deputy who seems in touch, Matt Fallaize is the youngest member of the States?

The irony is that most young people can't afford to run for Deputy as banks won't give a mortgage against a job with only a 4 year term!!

If the older generation who have taken the benefits of massive property inflation, had uncapped mortgage relief, retired on nice final salary pensions, taken on a nice part time retirement job as a Deputy start telling us we need to tighten our belts before cutting the fat off our bloated civil service and increasing income tax for the high earners then there will be a revolt and rightly so.

If you want to start, go back and recover the MIR that all those over the last 30 years have benefitted from - they are the ones that can afford it.

guern

Get Him out for GOOD.Has he got a mortgage(NO ?? )

concerned

If I was renting out a property I owned (and paying a mortgage on it), any costs/charges (whatever you want to call it) like this I would pass onto the renters. I'm sure most people would be the same. This will effect everybody except for the very wealthy which is pretty damn evil in my book.

Terry Langlois

A landlord cannot claim MIR in respect of the mortgage on rental property. MIR only applies to your principal private residence.

Spartacus

My tax note 7 says

"Interest paid on let property is also available up to the maximum rental income received"

Terry Langlois

Yes, but that is not MIR and will not be affected by the scrapping of MIR.

Landlords can deduct their mortgage costs (and other expenses) from the amount of rent, so that they only get taxed on the net income, not the gross rent. This is completely different from MIR and will not change.

Spartacus

Terry

Thanks for the clarification.

I think you are right and I can't see any proposal to change the subsidy for let property.

I would appreciate a comment on this from Gavin StPier.

AM

Terry - is that not just MIR in a slightly different guise? If the SoG are committing themselves to removing MIR for homeowners then surely it should follow that 'relief' should be removed for landlords who may own many properties via a mortgage as this is hugely beneficial to them at present.

Terry Langlois

AM - no it is not MIR in another guise and is not a tax relief.

Homeowners with a mortgage can claim MIR as a relief from the tax on their income which comes from sources entirely unrelated to their ownership of the property (MIR)

Landlords get taxed on the profit which they make from renting property. That profit is calculated by taking the rental income and deducting certain legitimate expenses - principally mortgage costs and repairs. So they are not claiming a relief from a tax charge - the tax only applies to their net earnings.

Laura

A whole review of taxation, social security and benefits is long overdue and desperately needed – rather than papering over the cracks with measures like the removal of MIR.

I have two points to make, one in respect of renting in the private sector, and a further one in response to those families who do work hard to own their own homes.

Private sector rents

Many who have commented here have said that it is a privilege to own your own home, and not a right, and those who have managed to secure a mortgage should be grateful for that, and not expect to get a taxpayer subsidy as well.

I would certainly challenge that, because what is the alternative – do we all continue to rent in the private sector? Or turn to social housing?

Renting in the private sector is not a long-term option for people due to the increasing rents and the ‘investment’ geared attitude of landlords. There are not many landlords out there these days who like to find long-term tenants who will stay with them for many years, and be able to treat their rented property like a home. Restrictions on pets, children, wear and tear, not being able to put a shelf or even a tea towel holder up – have meant that people live in their rented accommodation like they are walking on eggshells – desperate to ensure that after their two or three years there, they can get their deposit back. Private sector renting is no way to live and build a home for yourself or your family. And many landlords only want to rent for the one, two or three year periods, before they can sell the property and make a hefty tax free capital gain on the increase in value.

How much does a mortgage on the average home cost?

There are those here, like Spartacus, who say that people need to cut back on their extravagant lifestyles so that they are unaffected by the reduction in MIR. Does he really think that people enjoy being mortgaged to the hilt?

Let’s take an example of a local family, two children, one at nursery and one at school. Both parents work full time and are on £30,000 pa each. If they bought a house for £445,000, and they needed a 90% mortgage on it, over 30 years, what would their disposal income be?

Their pay, after tax and social security would be approximately £4,000. They would be paying approximately £2,100 per month on that mortgage, and of this, £1,390 per month would be interest. That would give tax relief of £278 per month. Let’s also say they have one child in nursery, at a cost of £750 per month. That leaves their disposable income at £1,150. From this they need to find groceries, utilities, repairs and maintenance, rates, insurance, doctor, dentist, clothing, school uniforms etc etc. That’s £287.50 per week for a family of four to live off. But with the tax relief on MIR, that’s an extra £69.50 per week for this family, and very badly needed indeed.

If families who own their own homes find themselves facing financial hardship they have to find extra work, cut down on food etc to the bare minimum – as there will be no help from the States. However, the story is not quite the same when you consider those who are already on the States radar, who get social housing, school uniforms, doctor, dentist etc all paid for, when they need more, they simply ask and they are given – as they have no assets – they have nothing to lose – and I think for some, but not all, this becomes their lifestyle choice.

We need more equality in our society, as Gavin St Pier has said – however, I think for most people that means that EVERYONE should contribute. There should be reductions in benefits for those who have a lot of children that the States are paying for, there should be increases in the tax that higher earners pay, this could be achieved by removing personal allowances for those earning over say, the social security threshold of £125K+. Why not restrict MIR and things like family allowance and GSSA pensions to those who do need them – if only those who had gross incomes under £100K for a family, or say under £50K for a single person, were able to claim these tax breaks and benefits – how quickly would that fill the black hole?

And when the middle has been squeezed to breaking point, the States need to think of a way to address the ‘hidden poor’, those that live on a small amount of money every month, either pensioners, private sector renters, or home owners – there should be schemes and systems that can help these people out too.

Craig

Gross income of £60K would only allow a mortgage of £300K tops surely? A £400K mortgage would be a massive 6.7x joint salary!

Laura

@Craig

Yes, you are right Craig - however, considering this is the official average price of local market property - and a comprehensive review of the estate agent websites reveals that won't buy you much anyway - But, please bear in mind what the average income is in the Island - two parents on £60K between them - that's not a million miles away from what many average Joe's bring home - and in several cases they bring home a lot less!

Simple economics, the average person can't afford an average local market home, and won't have enough money left to feed their family.

Will many more end up in social housing? I think so.

Spartacus

Laura

I don't think anyone enjoys being mortgaged to the hilt but it is a sacrifice people make. All I was saying is why should other taxpayers subsidise towards helping people with their mortgages?

Just as an example of how they might redistribute the funds, using your figures. If the States took your £278 tax relief back and with the £8M a year total savings gave everyone free nursery cover. You could potentially save your £750 per month (until your child reaches school age). The added bonus would be that other mothers could return to work too.

Which option would you choose?

Radical

@ Spartacus

You have hit the nail on the head - until we know the full picture how can anybody have an informed opinion about the removal of MIR?

Taking something away without any idea if or how it will get redistributed is politically about as stupid as it gets. Only when this is known should anything have been said to the public. Announcing the removal of a benefit and saying it MIGHT get redistributed in the future somehow was always going to cause an uproar.

Spartacus

Radical

I agree that this "seems" like a PR disaster but I suspect the seed has been sown which will have an immediate effect of slowing the property market whether or not the decision gets passed by the States.

Also, the SSD plans which went before the Sates earlier this year had good expenditure plans with no idea how to pay for it. Bring on the review which will tie it all together.

Laura

@Spartacus

Yes, quite agree, would be willing to give up MIR for free child care places for all that need them, ideally means tested sensibly.

However, with family allowance already planned to be canned for all except those on Sup, I can see who will be getting free child care places - and it won't be my children!!!

Zab

Laura,

The example you portray is of a family well below the £523 pw needed for a family of four after tax/si/childcare & mortgage/rent identified by the minimum income standards survey. The true scale of the wealth divide on the island is truly dire.

These are the figures that need discussion because £166 shortfall is still a £166 shortfall wether you are a Social Housing tenant or a "Middle" homeowner.

Unfortunatly the politicians do not want to acknowledge the huge scale of this monumental failure of policy that they like to pass off as a sucsess.

Benedict

I am fortunate, I am elderly and death will be the next big adventure. I am consequently disinterested in the debate, but not uninterested. The argument about an 'unfair subsidy' seems to me to be weak. The whole of society operates on a raft of 'unfair subsidies' - health and education most obviously. In those spheres subsidies are deemed to be in the interests of the community. So, it is equitable that the aged bachelor in good health helps to sustain a system that provides schooling and hospitals for others. In the past politicians have deemed it good for society that there should be a home-owning community. Hence the introduction of MIR. Now politicians wish to scrap it. If they wish to scrap it on a point of principle, surely they could have announced it before the election? Or is it that they wish to balance the books and have to resort to this? In which case it would be more honourable if they said: 'Sorry, we don't seem to have any option'. What I find distasteful is the mantle of new-found morality that they suddenly drape around themselves.

Phil

Your post made me chuckle Benedict, "politicians" and "morality" in the same paragraph, without the words "lack of" anywhere.

Forest

Spot on Benedict.

Dan

http://www.bbc.co.uk/cult/comics/images/articles/mekon.jpg

wot a surprise

Well I suppose if you are a barrister that had your house left to you by your family this new plan doesn't affect you that much.

Think that this has been very badly handled and even with the input of Mr Dorey (whom I do respect a lot) the trust has gone for this idea especially now with 2 different interpretations from the same dept. Mr st Pier seems to be becoming worringly entrenched and that doesn't usually bode well.

jones

What a crazy system, tax the poor so the middle class can get a subsidy on the mortgage. I know of cases where people max out the mortgage so they do not pay any income tax. It appears if you buy a house you no longer have to pay tax. I on the other hand can't even get a deposit together because I am paying the tax to ofset mr rich and his 400,000 Mortgage.

Bring in realistic relief upper limits, increase my personal allowance and tax those zero in zero 10 companies at least 10%. The poor still seem to pay to keep the rich in fine cloths.

A voter

A few thoughts.

It seems that this issue could perhaps be looked at by asking some basic questions such as:

WHAT, WHY, HOW and WHEN plus 'PROS & CONS'

WHAT

I think we can roughly see the WHAT - reduce and then abolish MITR

WHY

That is the first thing that should be clear BEFORE doing something. T&R have not made it clear so far. Is it - because MITR is an "unfair" subsidy, because T&R will redistribute if they can (to whom, how, when why?), because T&R might need the money to help reduce the deficit (the reason most of us suspect that lies behind this!)? It is nonsensical that the decision on WHAT is announced when the WHY is still being worked out!

HOW & WHEN

Pretty fundamental too, but that has been set out more clearly - phased out over 8 years, albeit provisionally.

PROS & CONS

No business or government usually makes any significant decision without a business case or impact assessment. That draws on the WHY - what are we trying to achieve - and what are the costs and benefits and other effects. How best can we do it? etc. Once they have done the analysis they can validate or change (as may be necessary) their initial internal proposal BEFORE announcing or implementing it.

What I think many of us simply cannot understand is how the decision announced can have been taken absent clarity on WHY and absent the analysis to underpin it.

This is clearly a complex area and in addition to which there is a wholesale tax / benefits review to be conducted in 2013.

Most of us will be impacted directly or indirectly by many of the changes that may come out of the full review. How can one fundamental change be announced in advance of the work to underpin it and all the related issues being considered? It defies reason.

Regardless of where anyone sits on the core issue of "is this relief fair or not and should it go?", surely all of us would think that the decision to continue, modify (and how) or remove (and how) only being taken in a considered, robust, defensible and fair way?

If T&R came up with a revised proposal (particularly to reduce the hardship for those affected by its removal) and if I could see all the other tax and benefits changes that would impact me directly or indirectly (and others could of course do the same) and if I could get comfortable that the package was not too risky for our community and economy as a whole too then I would probably support it.

In its present form, it is the product of a flawed and incomplete process and should quickly be acknowledged as such by T&R and then they should announce something in a professional manner when they have all their ducks lined up (presumably in about 1 year after conclusion of the full review).

The approach taken so far on this seems shambolic and incoherent at best and at worst there is a real exposure of significant economic harm from the actions people might take as a result of this announcement.

And many people in our community are probably feeling seriously stressed out by this announcement which is grossly unfair to do to them unless the cause is a properly thought through and definitive decision that seeks to minimise such harm. This announcement does not bear those hallmarks in my view.

Dani

I very much agree with a lot of what your saying. The why is so important.

Spartacus

Dani

"The why is so important"

Why should struggling low income taxpayers who cannot afford a mortgage themselves, subsidise other people's mortgages?

Why?

a voter

Spartacus

I think we all know your view on this and do not necessarily disagree. But that does not mean that the precise proposal from T&R in its current form is the right way to remove this "unfairness".

The "why" we are looking at here is - why are T&R doing this now in the way they propose when they have not worked out how / if / when to redistribute and how to deal with the adverse consequences.

In other words many of us are saying that this has been announced prematurely as a half-baked plan. They just need to do a lot more work and they might come up with something workable that many more people will be content with including you.

This is a multi-dimensional complex issue and it is simply not possible to look at one aspect in isolation and jump to a conclusion missing out most of the necessary intervening stages and overlooking all other considerations.

Nora Leafinsight

Mortgages today ... wife and kids tomorrow.

Gary B

I hope everyone heard Gavin St Pier on Radio G this morning. There has been so much misinformation flying around on this subject.

The only thing he can be blamed for is probably for not coming forward with a simple explanation of what this part of the budget meant.

The only recommendation in this budget as regards mortgage relief is the reduction from £400,000 to £350,000, which , he says is only likely to effect around 200 people in the higher earnings bracket.

The rest of the speculation on phasing it out by 2021 is not in this budget and will be open to future consultation.

If, what he said this morning is correct, then I go along with what he is trying to achieve in this area.

Radical

@ Gary B

I didn't hear him talking but I understand his INTENTION is still to phase out MIR despite not knowing what the impact will be and not knowing if or how this will be redistributed.

He should go away until he has thought this through and present the findings of a full taxation review with supporting evidence. Just says MIR is unfair and scrapping it seems like a personal mission of his and not a well thought out coordinated strategy.

Gary B

Radical,

This is the only proposition on the table:

PROPOSITION

17. To agree that with effect from 1 January 2014 interest relief will only be provided for mortgages not exceeding

£350,000 and to direct the preparation of such legislation as may be necessary to give effect to this decision.

What will be up for future discussion and Consultation , but not any part of the proposition for this debate wil be:

It is the Treasury and Resources Department‟s current intention, subject to consideration as part of the Review of Taxes, Duties and Contributions to recommend seven further reductions of £50,000 each in the maximum limit in future annual Budget Reports until this relief has been removed. It is the Treasury and Resources Department‟s intention, subject to the review referred to above and the prevailing economic and fiscal conditions at the time where possible, to redistribute the tax raised by withdrawal of mortgage interest relief.

It could have provided a better explaination and has caused a lot of unnecessary speculation, led by comments that were uninformed, but above is the wording taken from the billet.

a voter

There is no basis to modify the MITR whatsoever without doing all the necessary work to underpin it - which the yet-to-happen 2013 review will hopefully address.

So to say, we may or may not continue down this path, we are not sure what the implications of this action will be, we are not sure how or if or when we will redistribute or spend this money saved but heh, it won't be so bad if we just do a little bit of this thing we have not really thought through. We'll do the thinking bit AFTER we have taken the decision!

What if in the review they find out that it would be more fair to remove MITR in some other way (or perish the thought, not at all!) - then the decision to wind it down from £400k to £350k will turn out in retrospect to have been flawed.

It is simply not good enough to try and say this is just a little change so bear with us whilst we try and work out the details after the event.

Be bold, admit this is a premature announcement, take it back to the drawing board and then come back to the public and the States of Deliberation with a complete proposal sometime next year.

Given that this proposed initial change is not effective until 2014 what on earth is the rush anyhow?

This debacle is an example of chaotic government. Please get a grip.

Really

Only about 200 people will be affected by the drop from 400k to 350k ? Sorry, I think that is a load of rubbish, average house prices are currently at 445k ?

My mortgage is for 432k so I must be one of the very precious few mega rich (I wish!)

Interestingly I believe that once you have had a mortgage you will not qualify for rehoming by the States should you lose your house.

Probably better to sort out all of the other drains on all of our taxes first instead of taking what seems to be the easy target. Tackle the benefits system and the enormous overspends that the states make year on year then come after the rest of us.

If the first "adjustment" goes through then its going to be phased out, there will be no consultation (again more consultants) just the same thing every year with the same 500+ comments on this website every November.

Well I am sure St Pier will become a formidable spin doctor for someone in a couple of years when he loses his seat, although by then the damage will be done.

Terry Langlois

so let me get this right. You think that it is more important to tighten up on benefits (paid to the least fortunate in our society) in order to avoid having to cut a subsidy given to those who are able to afford a mortgage...

Really

Hi Terry

No I think it is important to tighten up on benefits paid to people who cant be bothered to get a job, but are happy to go shopping on our money to buy the latest phone, trainers, fags and beers.

I think that if they cant (!) find a job then some sort of community based activity should be assigned to them, same with single mothers (generalising a little here) that typicaly live on suplimentry benefit, and do nothing but sit around all day whilst you and I pay them for it. States run daycare, some mothers could get trained and work there so that the other single mothers could have subsidised child care and get out to work and pay some contribution back into society.

I have (for the record, if your still reading this) no problem with the benefit system where the claim is genuine, for sickness or if a family is struggling are just two examples, then of course society as a whole should help them out. That is everyones duty and one that anyone could come to rely on at some point, you never know what is around the corner.

Getting back on topic, the issue that has bothered me is the fact that if this 50k drop goes through this year, then as sure as eggs are eggs, every year it will be reduced. I would like to know who the consultation would be with, yourself? Me? Anyone that this really effects or just some consultant from the UK that will charge us 150k to write the report that T&R (GSP) wants to back up this policy? Lets face it, they ( the state(s) ) will never actually get a report that shows them in a bad light. Corruption rules

Sustainability

Most western governments are having to grapple with the massive current and future problem of the unaffordability and unsustainability of the "benefits system" that was created in different economic times and when demographics were not as they are and will be.

No matter how supportive each country wants to be of various groups of people in society there comes a tipping point where those left working and being taxed to support benefits that they and others receive are inufficient in number or earning power and then the whole system may be compromised.

I think many countries are seeing a long term benefits culture develop where for increasing numbers of people there is a lifestyle choice to go down the benefits route. Government policy can sometimes inadvertently fuel this problem and it will be really difficult I am sure to chart a course away from this to a long term sustainable system that has everyone who reasonably can being economically active and contributing as much as they can.

This is one of the massive challenges ahead and will doubtless have to be confronted here. The MITR debate has already highlighted that there are many cross-cutting issues - e.g. access to affordable family housing - which cannnot be looked at simply through the narrow lens of MITR removal.

An integrated approach is needed - and the full tax / benefits review next year looks like being a move in the right direction my view.

The real question

I have been reading this blog and all the views as I have a mortgage and this will personally effect myself and my family.

I understand both sides of the argument and have a question for both deputies Dorey and St Pier.

It is commonly known that Deputies Dorey and St Pier are heavily involved in property investments. On these they are able to claim FULL TAX RELIEF on any loans/mortgages on properties that have been let to tenants.

If it is the INTENTION of both deputies to scrap my "unfair subsidy",

is it unreasonable for me to know their INTENTION on their fair subsidy?

I am sure the answer (if I ever get one) will be "this will be looked at in the full review", but I feel this is a question the public has a right to know their personal views on.

Maybe this a question for a deputy to ask, Dave Jones?

Terry Langlois

there is a big difference between MIR and the deductions that may be claimed by landlords.

With MIR, a homeowner receives income in one area of their life and MIR allows an entirely unrelated expense in another area of their life to be offset against their tax bill. It is a favour granted by the tax system and is a favour which tenants do not benefit from.

With rental income, the landlord gets taxed on the net income which they receive from each property - i.e rental income less permitted expenses (including mortgage costs). It is simply a matter of working out how much profit they make from being a landlord and then taxing it.

Voter

Once policy objectives are set - e.g.support for the notion of affordable homes for all with minimum burden on the taxpayer - then presumably all the issues and options can be properly examined.

IF it were found that there is market distortion / excessively high rents or something similar operating against this policy objective and IF it were thought that action needed to be taken by government to address this then presumably one option would be to use the tax system and perhaps to tax in some way the activity - perhaps via the income tax system - if it were thought that this tax would drive the right behaviour - of course if it would lead to increased rents then whilst it might "feel good" to punish rich landlords, if that "punishment" were simply pased on to tenants it would have been counterproductive!

This and many other examples seem to underscore why T&R should tread carefully as the issue, when we unwrap it, seems rather complex and not something that can be fixed in these pages nor in one debate in the States next month - the ground work will still not have been done by then (so far as I can see with the review happening next year)

Terry Langlois

sorry, i have no idea what your point is

dan

i know little and care even less for local politics but even a blind man can see when he is being shafted. the financial deficit is nobody's fault except for those who control the finances of the island through bad management, thinking that they are politicians but have little or no qualifications to run an island such as this, and less said about some stupid prat who gave away over £2m of tax payers money to so nigerian lotto ticket seller, but punishing us for the f**k ups is what we can expect from a bunch of rag tag clowns. ive never been nor wanted to go to a local politacal debate but you can bet your bottom dollar i will be attending the next one that Mssr St Pier is attending and i will tell him exactly what i think! and hell probably take my bottom dollar and by another nigerian lotto ticket with it. SHAME ON YOU STATES, STOP SHAFTING THE PEOPLE WHO NEED A BREAK AND STICK IT TO THE BANKS THAT ARE RAPING THE ISLAND FINANCIALLY!!!!!

AM

I understand the difference Terry but my point is why are landlords allowed to deduct their mortgage costs before being taxed on their profit? It may be legitimate but it is really a perk as it benefits the landlord as he is able to use the profit from rentals to pay his mortgage. We,as homeowners, have to pay for our mortgages out of our hard earned wages after tax.

Terry Langlois

The basic principle of all (or certainly most) income taxes is to tax net income arising from an activity, not gross income.

A self-employed builder does not pay tax on everything his customers pay him, he can deduct business costs such as materials, petrol, wages for staff, etc. Anything else would be unfair

A landlord can also deduct the cost of doing business.

It is not a perk, it is consistent with fundamental principles of taxation.

A personal mortgage is not a business cost - it is a private matter unrelated to the taxed income.

Phil

Terry

If I take out a loan to buy some stocks and shares am I able to claim the interest against any dividend income?

The loan would take me over the £400k mortgage limit so I can't claim it via that route. Please advise.

soph

Mortgage relief should continue for 1st time buyers & occupiers of local properties (with a cap on purchase price).

James

In order to subsidize the cost of running these types of property, thereby pushing up their price and making them less affordable. Brilliant plan.

Bry

Back in the good old days when Guernsey was rich and the UNPAID States members were

more efficient than these paid ones are nowadays the States used to give extremely low interest loans to young couple to enable them to buy their own homes.

Ah, but yes, eh?

Ray

Bry

Methinks they were more 'efficient' in the times of plenty merely because it WAS the times of plenty

Want a 700K Hospital car park ? Where do I sign

Want a new 5M computer system? Here's a cheque

Want a flash airport terminal? Just make sure my name is on it

Want a low percent house loan? Fingers crossed it won't raise house prices

rosie

Bry. In the 'good old days when Guernsey was rich' money was frittered away left right and centre, with no thought given to ensuring that the islands infrastructure was prepared for the day when the economic tide turned, as it obviously would one day. Many of todays problems were sown in those 'good old days' and everyone was too busy enjoying the high life to stop and consider what would happen when the gravy train stopped.

Backchat

Can someone tell the States that the gravy train has stopped because it is still very much running on time in their eyes.

Backchat

The light at the end of the tunnel has gone out, time to give up the job & head down to the social, cost of living rise every year!

Bry

Ray and Rosie, you have given no thought to why they were rich and it was times of plenty.

Is no credit due to the, mostly businessmen,

who made all the decisions of government back then?

Spartacus

I totally agree with Ray and Rosie.

The current government has to make difficult decisions picking up the pieces of the reckless spending of the wealthy unpaid government of the past.

Ray

Bry

Credit was of course due in those days to the businessmen and bankers outside of the States who brought in the shekels

Unfortunately some of the bankers in other lands got greedy,and believing the good times would never end,took risks with money that wasn't really theirs to take risks with and it all collapsed

Our clever business Deputies running the States during the time of plenty did not see the fall coming and spent it all, which of course made them look good at the time but which causes anger now

Mind you 20-20 hindsight is indeed a wonderful thing!

rosie

Bry. To mention just a few obvious things:

The stated reason given for the required huge over-spend on the current runway development was because we have not been keeping abreast of its maintenance. And the same thing is going to happen with the harbour.... another multi million £ spend needed there because of lack of maintenance.

Then there was the looney interest relief on borrowing. A lot of money not collected that could have been saved up for a rainy day.

I would also add as another example, the lack of a transport policy, designed to preserve Guernsey's environment and fit for when the going got tough and driving became expensive. While there was money in the pot, we should have developed a fantastic, fit-for-purpose public transport system with integrated cycle ways that ensured we all made use of the different travel options. That would have now given everyone viable choices to reduce their travel costs while also assisting in keeping everyone fitter and healthier (because that is going to be another looming cost).

I don't agree with Ray that one would have needed hindsight to see the end coming. Guernsey's businesses have always, ever since time was, come and gone. It was always blindingly obvious that the good times would not last for ever and while the money was rolling, that was the time to invest in our infrastructure to ensure that we were well prepared for leaner times.

Tim C

The real reason for property value stress in Guernsey:

Overseas "Fund Manager" syndicates buying up all the "Local Market" properties!!!! Then also leaving some of them empty for years (For example: the shop with 3 bed flat on the Bridge, the old "Town and Country" agents shop).

Time to "Wake Up" everyone and the current governement to regulate this gross exploitation!!

Just over a week ago on a trip back to Guernsey I was in Gatwick airport travelling on the transit bus from the gate to the plane. For some reason our bus driver took a long route and as passengers we travelled together for about 15 minutes.

I was travelling on my own and got caught standing up between two loud separate conversations of 4 suited men that I believe were specifically, English 'Fund Managers'.

In front of me were two men in their late 30's to early 40's. What annoyed me (as a Guernsey born) was that they were boasting about their recent acquisitions of Guernsey properties and one of the men said I'm looking at pick up another 'Local Market' farm house. These two men had no concern about who was listening or how offensive their smug attitudes were being received by others, particularly Guernsey locals.

The other loud conversation behind me was almost identical regarding the acquisition of Guernsey properties.

I came away with a strong impression that Guernsey has become a naive target to all manner of overseas opportunist fund managers with billions of pounds to play with. It would seem that the Guernsey property market has become a sure thing to these Fund Managers, especially as there is hardly any risk compared to the current precarious stock market.

It would seem appropriate that States of Guernsey need to move on this fast and regulate hard the "Local Market" property sector as this type of opportunist exploitation effects every 1st home buyer as well as detrimentally impacting the rental property sector putting pressure on the Social Security Office of Guernsey regarding rental assistance..

The response from local people has been that something has to be done to regulate the opportunist 'Fund Managers' and the feedback has been unanimous that the current Guernsey Micromanagement system is not working to protect the long term interest of Guernsey local people. I have spoken about the thought of having a Prime Minister to implement decisions on behalf of Guernsey locals and this thought has been received with great interest.

I believe that now is the time for Guernsey to break away from the Micro-Management system of Government to a system that works throughout all Commonwealth nations. A system where a passionate, Guernsey born and honourable person is elected by the Guernsey people to stand up, represent and to serve the varying needs of our people and in particular the poor of our society as well as those who are yet to come behind us.

Thank you for reading this article.

Dani

How do they have access to the local market?

If the impression you got is real it is something that needs to be looked into so we know exactly what is going on and the facts of how it effects property prices.

Ray

Dani

There is no restriction on anyone from anywhere in the world purchasing a local market house

The restriction is that without the requisite licence they can't live in it

There are several local Estate Agencies who offer a rental management service for these investors.They would be a good place to start when trying to establish how prevalent it is

Dani

Thank you for clearing that up for me Ray.

Well this is definitely a cause for concern then. There is limited supply so any increased demand will surely inflate prices which is exactly what we don't want.

confused

Dani

As you should know anyone can own a local market property. It is the occupation of that property which is governed by the Housing Laws of the Island.

Pete

Stop all the moaning, you can afford to do without the tax breaks...deal with it locals.

Herbert Roth

Pete, assuming from your comment that you are a non-local, I'd be interested to hear what makes you think you have the right to give us Guerns advice on how to run our island? We may have our problems, but this little rock of ours is in far better shape than the rest of Britain, or indeed most of Europe.

Herbert Roth

Tim C: This is exactly what I said was driving Guernsey property inflation back when GSP first mooted the ridiculous idea that mortgage tax relief was the cause. I posted that it was too many non-local buying LM properties for investment purposes that was the real cause of rising house prices, but I had no idea that it was as organised as this. I totally agree with you that the States need to look at this problem urgently & take action without delay. They could start with a tax hike on property not owned by a locally qualified individual, at least that would make it less palatable to these parasites & probably raise more than the £8M GSP says he's going to 'save' by removing MIR.