IoD seeks urgent review of way the island is governed
LOW and middle earners are effectively paying more tax than they would in the UK, say business chiefs, who want an ‘urgent’ review of how government operates.
The Guernsey branch of the Institute of Directors is calling for reform in response to the publication of the annual independent fiscal policy review 2017, which looks at the States of Guernsey’s strategy.
The authors of the review said the change to Guernsey’s GDP was ‘an opportunity for the island to re-evaluate its fiscal position, spending levels and core strategies’.
It was restated from an original £2.4bn in 2016 to £2.86bn following changes to how GDP is calculated.
‘The two dominant themes that stand out from the review is that as a measure of GDP the States of Guernsey extracts a comparatively low tax take, but then commensurately invests little in infrastructure and capital development,’ said John Clacy, incoming chairman of the local branch of the IoD.
‘Those in the low to middle employed tax brackets suffer effective tax rates above those seen in the UK. Nonetheless, the report’s observations are correct and strongly support a full review of the island’s fiscal policy.’
While the IoD ‘strongly’ supported such a review, Mr Clacy warned any tax take increase shouldn’t be from the narrow band of the economy currently bearing the burden. An improved governance system would also be required for any tax increases and infrastructure spending.
On infrastructure, he said: ‘The States have the “dry powder” from the bond issue and have obvious and needed investment cases, from the eastern seaboard, digital connectivity, improving landing capabilities at the airport, to airline subsidies, education and more. But here comes the caveat - do we trust the current States to spend this money?’
Gavin St Pier, president of Policy & Resources, had rightly called into question the current machinery of government after the ‘debacle’ at Education and Economic Development – and the IoD welcomed news that Deputy St Pier and Health & Social Care president Deputy Heidi Soulsby were looking at the issues.
However, Mr Clacy added: ‘We at the IoD believe the time is right for an independent and urgent review of the machinery of government. This must be in place for the next election or we fear a further dilution of leadership within the Assembly as those who could lead despair at the lack of opportunity to do so.’
