Chamber warns over business tax hikes to prop up welfare

BUSINESS leaders have warned against knee-jerk big tax rises as a way to plug the looming holes in the island’s welfare-and-care system.

Guernsey Chamber of Commerce (29139769)
Guernsey Chamber of Commerce (29139769)

Stephen Rouxel, the finance lead at the Chamber of Commerce, said they would resist big increases in the cost bases of business.

‘To what extent businesses have to bear the cost really needs to be proportional and not punitive, to protect small businesses and those start-ups that we’re trying to attract and encourage.

‘Equally, the hotel industry is on its knees already. Are we really going to say that along with a huge TRP rise, and you have to pay extra pensions in 2022, and, this is not the kind of approach that we need. We need a considered approach.

‘We’re entering into a period where we want to see economic growth, and depressing business returns at this time is probably not what we want to be doing.’

The States has published two reports by the government actuary, which show a bleak picture if no action is taken.

Firstly, the Guernsey Insurance Fund, which pays for matters such as the old age pension and unemployment benefit, is predicted to be wiped out by 2039.

Secondly, the Long-term Care Fund, which pays for the cost of care in private residential and nursing homes, is set to run dry in 2053. The suggested solution in the reports is an increase in contributions.

Mr Rouxel noted with interest that a significant number of successful candidates in last year’s general election made manifesto commitments to no new taxes and no tax rises, although he generously put that down to ‘naivety’.

At the core of the debate, according to Mr Rouxel, is that the new Assembly needed to work out if they were ‘spenders or cutters’, and he wanted to see more of the latter.

‘We’ve already had a commitment to reduce the total number in government by 200, that was a commitment made in 2018, and I would very much like to see what progress is being made on that front.

‘I am aware that the total number of staff on over £80,000 including pension contributions has gone up by over 100 in the same period.

‘Usually when a CEO in business comes out and explicitly says ‘we’re going to cut staff and we’re going to cut costs’, if that doesn’t actually happen then I could say for the large multi-national that I’ve worked at, if the CEO said that and was given 18 months and didn’t get the job done they’d be fired, that’s what happens if you don’t deliver on those kinds of savings, that’s what happens in the private sector, we’re now two years in and we have yet to see the kind of savings that have already been promised.’

Where Mr Rouxel finds agreement with the politicians sounding the klaxon call on the state of the funds, is that States members must finally face up to the problem and tackle it.

‘It isn’t going to be a pleasant place to be, on the one hand you’re going to have to make service delivery cuts and/or tax rises, and I think and suggest we are likely to see a combination of both.

‘We are not in a position where we can continue to kick decisions down the road, this is going to be a crunch Assembly.’

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