'P&R must be fully behind its own GST proposals’

That is the view of Employment & Social Security president Peter Roffey, also a member of the Tax Review steering group. The long-serving deputy agrees millions of pounds have to be raised in order to balance the books, regardless of any savings that can be found through cuts and efficiencies.

‘I hope P&R are fully and forcefully behind their own proposals,’ Deputy Roffey said, ‘as it would be disappointing if they don’t do a proper selling job on them. That would make it more likely they’d fail and if they do, we’ll just be sticking our heads in the sand.’

P&R will ask States members to agree, when they meet on Wednesday of next week, that Guernsey should introduce a goods and services tax.

The report from the Tax Review steering group, led by Deputy Mark Helyar and including deputies David Mahoney and Roffey, alongside non-States member Mark Thompson, urged P&R to ‘seek direction from the States... that any restructure of the tax system should include the introduction of a GST and that this should be a broad-based system similar to that applied in Jersey and New Zealand.’

However, Deputy Helyar has said he is against GST, saying it harms the poorest in society, leads to a lazy government and encourages a cash-in-hand economy, as well as creating red tape.

As the treasury lead for P&R, it will be up to Deputy Helyar to convince members of the merits of the tax, if the committee is to succeed in getting it approved.

The policy letter being presented is a green paper, and so cannot be amended by the States.

If approved, it will prompt further work on the details of a reform of tax, which will then return for future approval and passing into law.

In the context of an annual deficit forecast to be in the region of £87m., Deputy Roffey is convinced that the new tax will be necessary.

‘However much we grow our economy and however many cuts we make, we will have to raise millions more through taxes and social security contributions,’ he said.

The steering group’s report marks out three separate options for consideration. One is to raise income tax by 3% and ring-fence the money for health care. The second is to bring in a GST at 8% and the third is to set the rate at 5%. All options also include a revamp of the social security contributions system to make it fairer.

Deputy Roffey favours the second option.

In the ESS response to the P&R green paper, he said: ‘Of the two options which include the introduction of a broad-based GST, the committee’s preference is option 2. This option raises more tax from GST and provides more opportunity to implement mitigating provisions which make the overall package the most redistributive and the best for lower and lower-middle income households of the three proposed.

‘It also leaves the island less reliant on the taxation of income than either of the other two options.’

A majority of candidates claimed to oppose GST prior to last year’s election, and Deputy Roffey has said that he expects considerable resistance to it in next week’s debate.

P&R in listening mode, page 3