A question from Mr and Mrs Average
ONE of the many reasons this newspaper and what might be termed the business lobby has consistently argued that government has to tackle its costs goes beyond what has already been identified as its financially profligate culture.
ONE of the many reasons this newspaper and what might be termed the business lobby has consistently argued that government has to tackle its costs goes beyond what has already been identified as its financially profligate culture.
It also goes beyond the States' reluctance to control its staff numbers, payroll costs and the escalating burden on the taxpayer of the public sector pension scheme.
Instead, the fundamental reason is simply this: Guernsey is running out of financial headroom.
Its response to austerity is a leisurely – but unachieved – attempt to pare £31m. over five years from a total income over that period in excess of £1.5bn at the same time as it has a current annual deficit of £27m.
Had the Assembly acted to reduce relative poverty, the Treasury minister says introducing GST is 'entirely probably'. His comments came at the same sitting that the chief minister revealed the average island family with two teenage children has a median income of £34,000.
And here's the rub. Deputies cannot keep hitting the average Guernsey family with higher heating, water and petrol bills and then make the cost of living here even higher by slapping a consumer tax on everything else.
At some stage – and given the attempts to take the cap off social security contributions it is not far away – ordinary, financially beleaguered islanders are going to question the benefit of living in 'low tax' Guernsey.
They will ask: Instead of hitting our meagre £34,000, why not take extra off advocates earning more than £500,000 a year, accountants and GPs on more than £250,000 or the growing number of civil servants taking home in excess of £100,000? Or even the chief minister, who after the election will be on nearly twice the average islander?
Guernsey will maintain a decent standard of living only if it retains its low tax status and the financial services industry on the back of it, but there is a limit to how much extra revenue to feed the still expanding bureaucracy can be taken off ordinary islanders.
Unless, that is, it is done fairly and comes from those who can most afford it – the very thing government has to avoid.
