WATCH: Budget 2021 - Cost of Covid put at £120m.

THE COST of the pandemic on States coffers this year has been put at over £120m., but the newly released 2021 Budget contains no new taxes or major tax increases.

The duties on beer, liquor, wine, cigarettes, and petrol will rise 1.5% in line with inflation.

Personal income tax allowances will rise by £300 and domestic property tax by 1.5%.

There will also be no slashing of public services.

However the deficit this year, or the gap between what the States spent and what it earned through tax and other means, is predicted to be £59m., and next year it is £23m. and will be covered by dipping into saving reserves and not putting any new money into the capital spending pot.

In terms of the impact of Covid-19, the level of financial support paid out to businesses through grants and the furlough scheme is estimated to cost £52m this year.

If the provision for Aurigny's £24m. loss, the impact on social security funds and on trading assets, most notably the income lost at the airport and harbour, are also taken into account, the cost swells to more than £120m.

Policy & Resources' Budget comes with a warning that covering the deficits is an 'unsustainable approach', and alongside a review of the island's relatively narrow tax base there will also be a need to 'scrutinise, review, and show restraint in expenditure' to ensure that public services are affordable and realistic.

Deputy Peter Ferbrache, the president of the Policy & Resources, sounded upbeat despite the challenges.

'We are in a far better position than many other jurisdictions and far better than we might have expected when the pandemic first arrived on our shores.

'Nonetheless we cannot downplay how devastating the impact of COVID-19 has been on public finances.'

Deputy Mark Helyar, the Treasury lead for Policy & Resources, added a note of caution for the future.

'We need our political colleagues and the community to be very realistic about our financial situation and how we spend public money going forward.

'The COVID-19 pandemic means some big, difficult questions are now brought into even sharper focus and must be answered by the new States Assembly.

Deputy Mark Helyar (28917600)

'First and foremost, what level of public services should be provided and how much tax are we prepared to take from the economy and community in order to fund these?'

Long-term spending needs have been estimated previously as adding another £80m to £130m a year.

The various States committees will get at least the same amount of money as last year, with a turning on of the spending taps to allow, for example, better drugs funding and affordable GPs and dentists fees for children.

Health & Social Care and Education, Sport & Culture will get the biggest slices of the Budget with £135m and £82m respectively.

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