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St Pier fires warning shot about new taxes

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GUERNSEY’S most senior politician fired a warning shot yesterday as he delivered the 2020 Budget, cautioning that the island’s current financial set up was unsustainable and new taxes would be necessary.

Picture By Peter Frankland. 05-11-19 Gavin St Pier at Royal Court on budget day. (26266598)

Deputy Gavin St Pier, the president of Policy & Resources, pictured, outlined the mounting pressures facing the States, including long-term care for the elderly, new drugs’ costs, a secondary pension scheme and climate change.

These challenges did not get much of a look in within the 2020 Budget, and Deputy St Pier told his fellow States members that some hard truths would need to be confronted.

‘We do our community no service at all pandering to a popular narrative that all their current needs and more in the future can be met costly for them, either by simply slaying a mythically inefficient spending dragon, or by finding someone else to pay more in taxes.

‘In January 2020 the States will be asked to debate a policy letter from P&R that sets out a revised fiscal policy framework within which the States should operate.

‘Due to the exceptional narrowness of the existing tax base, there is very, very little opportunity to raise additional revenues from the current structure, therefore it will be proposed that a review is initiated to examine our options.

‘Options to raise further revenues from corporate taxes and options for the introduction of new taxes in areas such as a ring-fenced health tax or consumption taxes.

Deputy St Pier said that helping people on lower incomes was at the heart of the Budget.

One of the flagship policies is a raising of the threshold where people start paying tax.

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Next year all islanders will be able to earn up to £11,575 before they start paying tax, and it was highlighted in Deputy St Pier’s speech that the personal income allowance has increased by £1,900 during this political term.

There were no rabbit-out-of-the-hat announcements, TRP on homes is still in line to go up by 10.2%.

Wealthy islanders will have to pay more on things like an aircraft registry, higher TRP on commercial buildings, and higher taxes on legal cannabis growing operations.

On the issue of Aurigny, Deputy St Pier was adamant that the massive multi-million losses at the States-owned could not continue. ‘These provisions do directly mean that there is less funding available for allocation to committees.

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‘The sharp increase in losses recorded and projected by Aurigny means that there is an immediate and urgent need for a coordinated and coherent government approach to all aspects of air route operation support to develop and safeguard air links to and from Guernsey.

‘The funding of these pressures has only been made available because the Policy & Resources committee has reduced appropriation to the capital reserve [account].’

Despite the unprecedented pressures Deputy St Pier was bullish that the 2020 Budget was one that politicians, civil servants and islanders should be proud of.

The word ‘realistic’ was repeated several times during the speech, but overall the island’s most senior politician seemed very positive about Guernsey’s economy and prospects.

Comment on Page 14 of today's Guernsey Press.

Helen Bowditch

By Helen Bowditch
News reporter

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