The move, prompted by a last-minute amendment by Policy & Resources, staved off a likely defeat for its favoured goods and services tax. A heavy defeat may have taken GST off the table for now, but it now looks likely to form part of any future proposals.
P&R’s treasury lead Mark Helyar admitted that the change of heart, which was revealed to States members at two minutes to midday yesterday – after Deputy Helyar had often said the pressure on the public finances left the States at ‘two minutes to midnight’ – was prompted by pressure from opponents of GST.
‘There’s been quite strong feedback that members have felt that the propositions – particularly proposition four – were backing them into a corner and into a yes or no position on GST,’ he said.
He said a lot more public consultation was needed, along with ‘a lot more explanation of why tax rises might be necessary’.
The amendment was approved by 37 members, with only Deputy Liam McKenna opposing it, and Deputy Bob Murray abstaining.
The tax review debate began two weeks ago, with a majority of the 28 members who spoke being against the introduction of a GST. Many of those who said they would support the proposal said they were doing so reluctantly.
Most members were expecting to continue examining the much-criticised proposals, which also included the establishment of a new body charged with looking at budget cuts. Instead, debate centred around whether P&R would be allowed to go back to the drawing board, with all options open, as it seeks to use the Bailiwick’s tax base to help solve a predicted £80m. annual shortfall between its revenue and its spending.
‘It’s only fair that members be given all of the options when they do make a decision,’ Deputy Helyar said.
‘The original propositions were not right from that perspective, and I’m quite happy to put my hand up and say so.’
However, he reiterated his view that budgetary savings and economic growth would not be enough to solve the structural deficit and that tax rises were therefore inevitable.
The new proposals, if passed as expected tomorrow, will instruct P&R to report back by July with detailed plans for a ‘restructure of the tax base’.
Asked by the Guernsey Press if he was confident of meeting this deadline, Deputy Helyar said: ‘No. It’s a big ask but we’ll do everything we possibly can to hit it, because we do need to reach a decision and I think it’s important to do that early in the term.’
Earlier in the summer Deputy Helyar criticised the proposals, saying they were based on ‘the wrong question’ of how public finances could be balanced if the States kept spending as at present.