P&R president rules out large tax rises next year

The States accounts for 2019 have recently being published, showing the island was firmly in the black with a strong economic performance and a sizeable surplus of £105.6m.

However, that snapshot from the pre-Covid era has now been decimated by the pandemic.

The economy is predicted to shrink by the largest amount in years, unemployment trebled over the course of the lockdown to 1,631 people, and the tourist sector in particular has been shattered.

In January this year the States agreed to a review of the local tax base to meet the financial challenges of an ageing population and consider new taxes such as a sales tax, health tax and a company profits tax.

However, while the demographic demands have not gone away, that review will not impact next year’s Budget.

Despite the recent collapse in revenues, Guernsey’s most senior politician is very upbeat about an economic recovery and

determined not to talk the island down.

Deputy Gavin St Pier, the president of Policy & Resources, bristled at words like ‘crash’ and ‘permanent scar’, and was determined to look on the bright side.

He also ruled out big tax hikes.

‘We have a very strong position compared to many other economies, to have a surplus in 2019, to have good reserves, to have a good credit rating – all of that bodes well and will help us in the recovery phase.’

‘The 2021 Budget planning hasn’t had a great deal of political attention at this stage because it’s being done at officer level, but over July, August and September is when the political input will come from Policy & Resources.

‘But we won’t be planning substantial tax rises because that would not be the correct response to this crisis.’

The ‘Revive and Thrive’ recovery strategy plots a new trajectory for the island’s economy and the line on the suggested graph looks like a swoosh, overcoming previous expectations of growth within three years.

The project to reform public services and make them more efficient and less expensive became ‘turbo-charged’ during the pandemic and the aim now is not to revert back to the old culture.

Guernsey has won high praise for its robust and innovative response to the Covid-19 pandemic, the international spotlight has enhanced the island’s reputation as a good place to do business.

No one is more convinced that the Bailiwick can now achieve a relatively speedy turnaround than Deputy St Pier.

‘Personally I remain very optimistic that we will have a recovery and it will be a strong recovery, we had a strong position going into this, and the fact that we were able to get a good control of the pandemic which allowed the

economy to restart faster than most other economies is really positive.

‘It is an optimistic statement but I believe it to be true, not least because we’ve seen what we are capable of as a community when we pull together, so we only have to apply that same discipline and focus on the recovery and we will only be limited by our ambitions and not anything else.’