Island faces a stark and binary tax choice - Helyar

GUERNSEY faces a stark and binary choice between raising income tax by 6% or introducing a VAT-style consumption tax.

Deputy Mark Helyar. (Picture by Peter Frankland, 30385960)
Deputy Mark Helyar. (Picture by Peter Frankland, 30385960)

That is the message that is shortly to be communicated to islanders via leaflets, web pages, broadcasts and speeches, as Policy & Resources seeks to pursue a goods and services tax.

In short, P&R’s treasury lead, Deputy Mark Helyar, said he was hoping to take islanders on the same journey he said he had endured in the last year and a half.

When seeking election in 2020, he stood on a platform of ‘fiscal prudence, low taxation’ and when asked his opinion on GST, said he was ‘against it, as it harms the poorest in society’.

He was elected to the States, and then selected by his deputy colleagues as treasury lead at P&R.

And after looking at the books, he said he had become completely convinced of the merits of GST.

‘What would happen if we don’t have a GST is that every worker in the island is going to pay 6% more in income tax.

‘So, although retailers might be afraid that they will lose out if their prices go up [with a GST], the people who come to their shops and buy things will have 6% less to spend,’ he said.

This assessment is based on an additional revenue of £13m. for every penny added to the income tax rate, measured against an anticipated annual shortfall between forecast revenue and expenditure of £85m.

These calculations and many of the other conclusions reached by P&R were challenged by deputies when they debated the introduction of a GST in October, prompting the senior committee to seek a delay.

This means another debate will now happen in the summer and P&R seems determined to spend the intervening time persuading the island – and, crucially, sceptical deputies – that there is no other way.

‘We have to take the public with us and part of that is understanding the cost of public services. It’s about earning trust,’ he said.

Deputy Helyar made clear his view that if the persuasion campaign was not successful, it would be to the island’s detriment, rather than his own.

‘This is not a personal debate,’ he said.

‘If I lose the debate in July, it won’t be my loss. Somebody else is going to have to stand up in the next government and make the same case.’

In addition to cost-cutting and stimulating growth, more money will need to be raised through taxation, Deputy Helyar has affirmed.

He believed GST – combined with measures intended to compensate the lower paid – was the better option compared to raising income tax.

The issue was raised at this week’s Scrutiny hearing on the progress of the Government Work Plan.

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