Relax population rules and cut out the ‘bad spending’

SAVINGS need to be made and the island’s population rules relaxed before the States looks at tax rises, the Chamber of Commerce has said.

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It was reacting after Policy & Resources published a five-year forecast that predicted government deficit would reach £56.2m. a year.

A tax review will be published in September.

Chamber of Commerce finance and professional sector lead Stephen Rouxel said there was significant concern with the message that there was ‘no more money to spend’, arguing instead that the way the money is spent needed to be reviewed urgently.

‘While Chamber has consistently called for cost savings in areas that we would consider “bad spending”, we very much believe that there must be a concerted push for what we would deem “good spending” and would urge government to acknowledge that there is a difference,’ said Mr Rouxel.

‘There is a fairly long list of bad spending by successive iterations of the States dating back many years.

‘What would we classify bad spending?

‘Some clear cut examples would be the failure to deliver cost savings under the previously agreed financial plans by major committees such as Home Affairs in the last political term or the promise and then failure to deliver on civil service job cuts such as those promised by Paul Whitfield.’

Good spending was linked with potential revenue generation, he added, including such prospects as investment in regeneration to encourage more private investment or in connectivity, at the harbour or to deliver fibre connections.

‘Innovative, rather than regressive, approaches to government spending, debt and risk as well as a review of the current States assets should be the first step taken by all States committees, and in particular P&R.’

And tough decisions on matters like health services and education costs should be left until last, Mr Rouxel said.

Chamber has also urged the States to act on the impact of the island’s ageing demographic.

‘Chamber firmly believes, and has been fairly consistent in this message, that a managed relaxation or suspension of the population management regime must urgently be considered prior to any decision on future tax rises.

‘This would is a bold political step but without this step, the best case for Guernsey is a stale decline rather than the refreshing prosperity we all hope for.’

Mr Rouxel said a significant majority of deputies ran for election on a mandate of ‘no new taxes’ and said they had to pursue other priorities first.

‘Spending cuts and demographics should be the top priority for the next few years.

‘If the States is unwilling to cut spending and incapable of recognising that the island must manage its population better, then tax rises are, sadly, inevitable.

‘There are pros and cons to all different tax levers that can be used and we would expect any review to highlight both the pros and cons of each.

‘One such change that might easily be considered is a change to the zero-10 regime.

‘Changes in that area are likely to be needed to demonstrate our business credentials as part of the wider trading world if nothing else so this should certainly be on the table.’

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