Poor will be hit hard to fill the black hole

CURRENT plans to fill the tax black hole will fail to protect the lower paid. Social Security minister Mary Lowe believes the proposals contained in the second consultation document for the island's future economic and taxation strategy just pay lip service to the corporate anti-poverty programme.

The Fiscal and Economic Policy Steering Group, chaired by Chief Minister Laurie Morgan, has compiled the 40-page dossier.

'Those on lower incomes must be protected from any changes and taxation increases need to be targeted on those who can afford to pay, not those who are most vulnerable, including those on fixed incomes and pensions,' says the group.

'The corporate anti-poverty programme will continue to be a key policy of the States and will need to continue to be funded.'

It adds that a major reason not to adopt a general sales tax is because the burden falls disproportionately greater on the poor.

To compensate, benefits would have to increase.

But Deputy Lowe believes that the group is paying nothing more than lip service to the ideals of the corporate anti-poverty programme. She said that the way in which a GST would hit the poorest hardest is not quantified.

The group believes that instead of having a GST, a better way to fill the cash gap would be to remove the '35m. grant from general revenue to the social insurance scheme and then increase contributions to plug the hole in the fund.

It says that some of the monies saved from not giving the grant will be used for the aims of the programme. Deputy Lowe says that this is not quantified.

The only bits that are quantified are the removal of the '35m. grant, which is used to help the lower and middle income earners, and the rise in contributions needed to compensate.

Deputy Lowe added that in Jersey the costs and benefits of a GST were thoroughly explained and quantified in its consultation documents but they have not been in Guernsey.

She said that those Jersey documents showed that administration might cost only '400,000 and need 10 staff.

And she said that not only should the costs for doing it alone have been calculated but so too should investigations into inter-island cooperation with a single administrative system and the benefits it could bring.

Deputy Lowe said that following her department's leaflet drop to island homes, there was a realisation of how it would affect people.

She said that there was a ground swell of opinion amongst the Guernsey International Business Association membership moving towards a GST rather than using the social security system and increasing contributions.

Deputy Lowe said that there was a realisation that these proposals would hit firms above the line and as businesses were about profits, they would prefer not to have them enforced on them.

Giba chairman Bob Moore said: 'I think the more accurate way of putting it is that it is an issue that the membership continues to have under discussion and consideration.

'At this point in time there is not a strong consensus majority view.'

Treasury and Resources minister Lyndon Trott is set to respond today to Deputy Lowe's comments.