‘We owe it to our children’

POSSIBLY raising the 20p in the pound income tax rate and taking more tax from businesses have been suggested as ‘progressive measures’ in an amendment to raise more revenue for the States.

peterroffey

South-East deputy Peter Roffey has lodged an amendment against the States Medium Term Financial Plan, revealed last month as part of phase two of the Policy and Resources Plan.

Policy & Resources had proposed the States needed to find £40m. per year to tackle the ‘structural deficit’, with £26.6m. coming from public sector savings and £13.3m. through taxes.

However, Deputy Roffey felt a more radical approach was needed to ensure sufficient funds were available to invest in the island’s infrastructure, supply vital public services and replenish Guernsey’s strategic reserves.

With the support of Economic Development president Deputy Peter Ferbrache, he has now set out proposals which would see the revenue raising target increased from £13.3m. to £25m. and the States savings target reduced from £26.6m. to circa £25m., creating an extra £10m. overall.

While Deputy Roffey said it was up to P&R to decide exactly what measures should be introduced, he did have some suggestions.

Comments for: "‘We owe it to our children’"

chris1

WHY NOT Quite spending as if it's an olympic sport. Instead all sit down and see how to reduce spending on projects that do not need daft expences, and also try doing a study on how each committe manages to spen its entire allocation just before the new accounting year. ( buying anything and everything just to keep the money allocation for next time.) and we all know what happens next...

LOCALGUERN1066

I am in shock a Deputy with some common sense !

I have been banging on for ages about the archaic tax system we have and I would want to see an increase in the income tax rate to 22 or 23 pence but at the same time a generous and decent increase in the tax free allowance so the lower paid are not penalised and hopefully would be better off.

Alongside that raise the maximum cap that rich people stop paying income tax at.

Business taxation and capital gains tax should also be looked at as well as a form of Inheritance Tax. Perhaps a form of VAT s we need to widen the sources of tax as we are an ageing society ?

There are so many reasons why we need a moral and fair tax system. As an ageing population, the need for better health and education provision otherwise we will be left far behind.

The thing to note we would still be a very low tax regime compared to most other developed jurisdictions.

For instance these tax rates apply to people with an average salary for their country.

Belgium- 42.80%, Germany - 39.90%, Denmark - 38.90%, Hungary- 35%, Austria -34%, Greece - 25.4%

UK - 24.90%, USA - 22.70%.

Interestingly and obviously if we want great public services, great health care and great pensions - guess what - EVERYONE has to pay an equitable amount. It is not that complicated.

Rupert Walthumstow

So you want to tax young & working age people - who are already no better off in Guernsey than in the UK on average wages - to fund benefits for the older generation and/or those who cannot be bothered to work, and expect them to hang around and try and raise a family here, with increasing taxes, stagnant wages, expensive housing, expensive travel and increasing retirement age? Or might they just move almost anywhere else where they would be better off?

Brilliant idea.

LOCALGUERN1066

Rupert - If you had read my post fully I did say that the tax free allowance should be increased to a generous level and therefore the lower earner would not be taking home less and hopefully more. I am therefore confused as to why you think they would be penalised.

I am all for taxing the rich more and making sure the old, like me, are not a burden on the young but we can't have it both ways. Personally I am very happy to sell my house and pay for long term care myself but my kids have to accept that there would no inheritance. It is not up to the States to pay if I can but I expect the States to support me once ALL my capital is gone. Similarly those who don't have cash or property need to be supported by the States.

All sophisticated nations are faced with the dilemma of pension costs and most seem to have accepted that if you want good benefits then you need to pay more or retire later. An unfortunate but realistic fact of us all living too long ! Basic maths.

You talk about people moving elsewhere but again the reality is they would have to pay the high taxes I showed in my original post above if they did go elsewhere. We are and would still be a low tax country.

As for those who 'cant be bothered to work' - there are of course some, as in every community, but the not all the 300 or so unemployed on this island are scroungers

Trudie

Local Guern 1066

You fail to mention that your generation, known as baby boomers are, and will be for a number of years yet, responsible for a major strain on public finances in the form of pension payments and healthcare which the current generation of earners ( a significant number of "jams" included) are expected to cover. Simply put, what you paid into social insurance during your working life does not now cover the cost of your pension and healthcare and we, the current working population have to make up the difference as current state pensions paid out are covered by current payments by earners into what is almost like a pyramid scheme. I'm not trying to be harsh or unkind, simply state facts. The large majority of the current working population will never have a state pension as generous as yours and won't be able to retire as early. I would be in favour of having a pension payment that is in part means tested, meaning the full pension goes towards those least able to afford it. And sooner rather than in 10 yrs time. How's that for radical Mr Roffey!

I think we all have to shoulder some of the burden not just current earners who face phasing out of mortgage interest relief, non transferability of tax allowances between married couples to mention just a few of the areas which will cost us more now, that mightn't have been around during your working life. Yes interest rates were higher esp in the 80s but offset by lower housing costs and mortgage contributions as a percentage of household income have increased significantly since the 50s and 60s necessitating 2 parents working.

Also one of the major costs that doesn't get enough mention is the civil service pension deficit that is quite a significant cost to the island and still in litigation. It needs sorting out asap as it dwarfs any savings the states say they are trying to make elsewhere.

I was very surprised by the recent headline that one states dept is looking for £83m to build 800 social homes over the next 3 years when we do not apparently have a homeless problem, the island is awash with unsold properties that could be purchased by the Gha as in the UK, the tax payer will be saddled with paying the rent for those who cannot afford it even long after the original cost has been paid for and the repairs and maintenance rather than private rentals. I am all in favour of looking after those who need genuine help but this seems like encouraging overreliance on the state ( and taxpayer)

That combined with building an expensive new school with nice to have added extras on a marsh ( requiring extra cost )makes me think we have our priorities wrong on this island. If the states can find land to build 800 new properties surely we can find a better site for a less expensive school.

A number of years ago our social insurance contributions were increased to cover costs of long term care without having to sell our homes and now we're being told that it's not enough, who is accountable for this and can explain why it is not enough, the list goes on...

Island Wide Voting

Thank you Trudie

No idea who you are but I really hope that you are a sitting Deputy ... one of the very few with a smidgin of common sense

LOCALGUERN1066

Trudie - Please don't make assumptions about people I was born in the 1930s and I am no 'baby boomer'!! Possibly a cause of it in my younger days but that's another story !!! Merely on old man who cares but i will take it as a compliment!

My argument is not very different from yours. In essence those who can should pay more than those who can't should and I have yet to be convinced of any other way of doing it. As you rightly say we ALL have to accept the burden of taxes and if my annual income of £18000 per annum is further taxed so be it but only if a high earner is taxed at a higher level than I am. Please note I am not complaining about my income- its' good enough for any pensioner without a mortgage or rent to have a great life style. A simple one but a good one and i know there are many here far worse off than poor old me! As I said I will willingly sell our home and pay ALL of my capital towards my care if I need it in the future. I am willing to contribute for the benefit of the younger generation.

The States have and are trying to reform the employees pension scheme but as we all know there is a current legal case to test the validity of the proposed changes. we await the decision. Even the States are bound by the law.

Social homes are needed as the current stock is ageing and inadequate. I would have no problem in the States buying private property to rent out but suspect our class driven neighbours wouldn't want just anybody living next to them ! It may lower the tone of their parish and could own an old car and wear a football top ! There is inadequate protection for tenants who are often exploited by landlords. here for instance there is not even the requirement in many private properties to intall a fire alarm!

A new school is needed and we eagerly await the plans of Education which hopefully be public at the end of the month.

markB

Comarad 1066- Why not sell up and go live in say Russia or North Korea? I think you Will love it there.

LOCALGUERN1066

Mark - There is nothing left wing about my views only a simple realisation that if we want to support a dynamic and fair society that those of us who can pay more should pay more.

Pensions, Education and Health all have to paid for and we can't expect to have good benefits without having put something in at the other end.

What would you do ?

How would you raise standards for all including the poor?

Would you prefer a two class systems ? One for the poor and another for the rich?

Do you want everyone on this super wealthy island to have a great standard of living, great education and good health services and how are you going to do that ? Entrepreneurship and business is immensely important but so is a fair taxation system and we don't have that.

markB

Nothing left wing? Are you sure.

Island Wide Voting

LOCALGUERN1066

When the discussions start between Guernsey / Jersey and Isle of Man about maintaining personal and business taxes as close to each other as practicable so as not to lose business to the others perhaps you can volunteer to sit on the panel

markB

Local1066 -- Taxing the rich out of existence is not the way, they bring other benefits to this Island . The key is cutting the States CS wage bill and States expenditure.

Prospero

MarkB

Why not raise your political reading away from the Beano ?

Your grasp of the political spectrum is hilarious.

Russia under Putin is Left Wing ? - you are so 70's

Try and grow up and keep up - there's a good little chap

markB

The Dandy was my preferred choice.

Prospero

Aah - The Dandy

Of course.

More pictures.

markB

yes very much so. Topper was also another favourite.

thames

You owe it to tax payers to cut the cost of government. You are on a small island and there are only a limited number of taxpayers. Instead of focusing on "progressive" taxes why not focus on doing more for less and finding more innovative and cost effective ways to run this tiny island?

It is too easy and unimaginative to say "we will charge businesses more", we will "put up the flat rate of tax". Many businesses can work out of any jurisdiction in our globalised world- they will leave. As well as people who object to higher taxes and too much bureaucracy and waste in government. Haven't you heard of the Laver curve?

What you should be doing Mr. Roffey, is creating the conditions for businesses to grow and flourish hence increasing tax receipts instead of this lazy, sloppy 1970's thinking.

Guernbloke

When the States stops frittering money away on vanity projects, consultants and strategy after strategy -

States shorthand for writing lots of words and not actually doing anything - then come back with your ideas, Deputy Roffey.

Roger Irrelevant

The test is would you say it to his face?

GuernToTheDogs

Hmm, possibly as long as there were no legal repercussions. We all know whos side the police and law officers would take. Thankfully Guernsey hasn't quite got to the state of stifling free speech as they have in the UK.

Oskar

Can I offer the suggestion that in the wake of Brexit in two years time, or possibly even ahead of it, many international businesses will decide that it is too expensive to operate out of the City of London and may look at other jurisdictions to which they might move their business.

A jurisdiction with more gentle personal and corporate tax rates and operating costs than the UK may well tempt them, although that jurisdiction would also need regular and reliable transport connections to the outside world .......... damn, that's my vision scuppered!

Prospero

Oskar

Much more likely that City business will re-locate to Frankfurt, Paris, Dublin etc

Interesting piece on Radio 4 this morning about very aggressive / attractive measures by Paris to lure business away from London.

Outlook for the City may be slightly better now that May is wounded and will go soon - Johnson / Gove administration following May being pressured to step down might be able to stem that flow but should it go to another election then Corbyn will bring Labour in and that I am afraid may lead to some "adjustment" both in the City and certainly here, Jersey and IoM.

I cannot see why major players within the Eurozone would be less attractive to serious business - the political pressure that will be brought to bear by Merkle and Macron might be a tad too much for GStP and LT to match.

Swonderful

Personally don't think that increasing income tax a little and increasing the tax free allowance is a bad move. Have to be wary of competition from Jersey / IOM but if you discount the fact that Guernsey does not have GST it probably evens itself out - people aren't going to move away or refuse to come if taxed on their income at 2 or 3% more. At the end of the day it's still 17% less than the UK tax rate for high earners.

Previously there used to be a good incentive for young people to return back to the islands working population after university etc. This was due to a combination of lower tax rates, higher personal allowances and more job opportunities. Unfortunately now the UK allowances have increased so median earnings are taxed more in Guernsey than the UK despite the lower tax rate, there aren't the same number of jobs available (employers now generally looking for relevant qualifications and less likely to take on graduates) and housing / living costs are generally higher than everywhere apart from London/Commuter belt areas. This has long been a concern because with immigration being so restricted in Guernsey and the need to attract more working age population due to demographic issues the island clearly has to make sure that it competes with the UK for human capital and creates an attractive environment for its young talent to return to. I'm not sure if there are statistics for returners but would be interested to see these - my assumptions are based on what I have heard / seen.

A few extra quid in the back pocket isn't going to necessarily make all the difference but it might make some difference and besides which it's probably a slightly more equitable and progressive distribution of wealth and would also help those feeling the squeeze from all of the stealth taxation increases we see each year.

The alternative is to introduce GST and then you can tax visitors and those higher earners who spend their hard earned in the local economy. It would significantly broaden tax base. I know it's not popular and probably political suicide for GSP but it is probably not the worst idea in the world.

Business taxes again if done well then could be good but I expect the states will just increase business rates significantly which I would not be in favour of as it penalises all regardless of profit generated. An alternative would be to raise the rate of tax paid by those in the 10 band slightly higher. This would capture more of the tax take that goes off island (i.e. to non resident shareholders). It's worth remembering that those resident shareholders already pay an effective rate of 33% tax (20% income and 13% social) on dividends.

You can't really get away from the fact that the island needs more tax revenue it has been glaringly obvious for several years now despite FTP etc. It's all well and good bleating on about reducing the cost of government but I have seen the effect that some of the cuts in health are having (such as not being able to recruit because of wage freezes for several years) and to be honest I'd rather pay more tax and have a better service because you never know when you or your loved ones are going to need it.

Beanjar

The old "just a few pennies more in tax to be earmarked for such and such" argument is very stale and discredited. How quickly those 'few extra pennies' get multiplied and how soon their purpose gets completely forgotten. How about Road Fund Tax which escalated to extraordinary amounts and has probably never been ring-fenced for roads. Then it got amalgamated into the price of petrol, and now it has been slightly revamped into extra new car taxes. So now we pay it several times over, we don't even know how much it amounts to and haven't a clue where it ends up.

How about all those 'State Pension Contributions' which it turns out were just spent by the government so now there is no money left? Before we go for 'just a few pennies of GST' just remember that UK VAT started at 10% and is now 20%. If we bought it in at 5% how long before somebody demands parity with the EU: "VAT in any EU state cannot be lower than 15%"?

In my opinion it would be madness to raise the basic rate of 20% Income Tax making it higher than jurisdictions we compete with. That is a key comparator, and there are better ways to skin the cat. If it wasn't for the vast amounts frittered away by our government wasters, few could argue against marginally higher rates of Income Tax, for example.

Swonderful

Bury your head in the sand all you like but there is a large structural deficit and it needs to be filled by a combination of more tax and cuts. It is simply not possible to provide the infrastructure guernsey requires and the services the public demand from a modern public service (including Health care) without increasing taxes in some way shape or form and the question is what is the fairest way of doing that.

Beanjar

Well raising our basic rate of Income Tax so that it is higher than the UK, Jersey, IoM (10%), Eire, USA (10%) etc. will not help. People we need will either go elsewhere or leave. Leaving no net gain in the tax take. Playing with figures without taking people's resulting actions into account is folly. You wouldn't have thought Camelot could go far wrong but, in an effort to make more money, have reduced their sales by £300m and their own profit by £16m this year. Nothing clever about greed.

markB

good point Beanjar, Its like putting fuel prices up & Up, people cut back on using fuel or get more economical cars, so the States have to find more tax, so hit the motorist again, make it cheap and people will spend

Beanjar

For clarity, by 'higher rates of Income Tax' I meant one or more additional IT bands.

Rokayne

markB

You having trouble Rokayne?

Island Wide Voting

Caught up in the Castel siege?

Bill Detats

The States should stop all wasteing of money before taking more taxes and charging for things we have so many silly things the states wants to spend money on which arent needed. Why waste money when we dont need to and we dont need to pay as much wages as we are on deputies and civil servants and its easy for people to say this sort of stuff when they havent ever had a proper job. Get back in your box Mr Roffy.