Financial recovery helps island beat Covid again
GUERNSEY’S economic recovery from Covid-19 has been described as ‘spectacular’, with latest figures showing that this year’s hole in public finances is much smaller than expected, and next year the Bailiwick is forecast to make a surplus.
Income tax receipts for this year are £26m. higher than expected, document duty is £8m. higher, and customs duties are £6m. above what was forecast.
Business support measures to help companies through Covid had been anticipated to reach £51m., but that figure has now been reduced to £25m. because many businesses decided not to make claims during the second lockdown.
It means that instead of a black hole of £22m., this year’s deficit is now estimated at just £5m.
The 2022 Budget, published today, predicts a £22m. surplus next year, and plans for increased government spending.
Mark Helyar, the treasury lead on the Policy & Resources Committee, said he was delighted to see the accelerated recovery.
‘You will struggle to find anywhere in the western world a bounce back this strong, to have bounced back this fast and put ourselves back into the position had Covid not happened, is exceptional,’ he said.
‘I think the public need to slap themselves on the back for it because it’s a joint effort by everybody, and we’re effectively now where we would have been had we not had Covid.’
Despite the economic turnaround, Deputy Helyar said it did not undermine the need to consider new taxes such as GST, because longer-term fiscal issues, such as the ageing demographic and capital demands, remained.
‘We’re not trying to chase too much money out of the economy, we’re not trying to pile the pressure on, we still need to get through the next stage of recovery and it’s important not to start compressing recovery.
‘The other discussion that we’ve been having in the States is to look at something that’s years into the future, the peak demand for the kind of service pressures that we’re talking about is 15 to 20 years away.’
In line with previous policy decisions, inflation-busting tax rises on cigarettes, alcohol, fuel and TRP have been proposed in the 2022 Budget.
The duty on a packet of 20 cigarettes is due to go up by 7.5% or 44p, and the duty on alcohol is in line for a 4% increase, which will put 2p on a pint of beer, and 60p on a litre bottle of spirits.
There are also 4% duty increases planned for fuel, and domestic and commercial TRP.
The personal income tax allowance will rise in line with inflation, up £300 to £12,175.
Deputy Helyar said that there were no ‘freebies’ in this Budget.
‘There are no giveaways and I think it’s very unlikely that there will be any giveaways in the significant future.’
