Let's learn Lansdown tax lesson

NEWS that Bristol City FC chairman Stephen Lansdown is moving to Guernsey is significant for a number of reasons.

What his comments to the Guernsey Press yesterday demonstrate is what so many islanders already instinctively know – there is such a thing as a 'fair' rate of tax. No one actually wants to pay a penny but we all understand and accept the need to do so, but only within reason.

For most, deciding which tax regime to embrace is not an option. Financial, family or employment considerations mean that changing domicile is generally out of the question, but the reasons why the super-rich do so will be understood by all.

Why let government – any government – fritter what you have worked hard to build for your family and children?

The evidence is also clear that tax rates affect economic performance. David Cameron has already said that unless the outgoing Labour administration's 50% rate raises significant sums it will be scrapped. In other words, he is not prepared to see it damage Britain's best interests simply for political dogma.

In Guernsey, however, the current mentality seems to be that taxes can be raised indefinitely to finance a public sector that has allowed its spending to get out of control, certainly according to a leading member of the Health and Social Services Department in a letter to this newspaper.

The reality for the island is that it has to retain a low rate of income tax and other benefits or it, literally, goes out of business. Jersey and the Isle of Man would fight to the death to retain their 20p in the £ competitive edge and there are limits to how much can be clawed off people through consumption or employment taxes.

In turn, that means politicians and those who elect them have to get used to the island living within its means, something that has not happened for more than a generation as a result of previously rising revenues.

Islanders are aware of the new reality but the performance of the States last year – breaching all its expenditure limits – shows that it has yet to learn the Lansdown lesson.