Tax rises unpopular but right thing to do – Gpeg
A BUSINESS-oriented think-tank is urging deputies to accept the necessity of increasing taxes, despite the risk to their popularity at the polls.
The Guernsey Policy and Economic Group (Gpeg) has produced a 14-page report which recognises the need for more tax, while still calling for public sector cuts, and the cancellation of non-essential capital projects.
It fears that the projected annual revenue shortfall in government finances could far outstrip the forecast £85m., and be more like £220m., and so increasing tax take is essential.
‘We need a realistic and sustainable plan for this jurisdiction,’ said Gpeg director Susie Crowder, an experienced non-executive director with a background in training and human resources.
‘The statistics are alarming and we want to educate some of those deputies outside of Policy & Resources that the can cannot be kicked down the road any longer. We need to increase income through tax, even though that is electorally difficult.’
Several deputies – who she described as left-leaning – had expressed to Gpeg a preference for increasing taxes for richer islanders, she said, but this could potentially backfire.
‘Some politicians forget that high-net-worth individuals create wealth, provide employment and are highly mobile,’ she said. ‘If the tax regime is no longer to their liking, they can very quickly leave.’
P&R is due to publish its policy letter on tax reform at the end of this month, having delayed it for several months, with its treasury lead Deputy Mark Helyar arguing that that spending cuts and economic growth will not resolve the issues. The States is still expected to pursue some level of a goods and services tax.
‘A GST is perhaps the right way to go, with some exemptions to protect the most economically vulnerable,’ Mrs Crowder said.
‘We’re broadly supportive of the current P&R members.
'They’re an astute, commercially and economically-aware committee and we’re supportive of the fact they’ve embraced this difficult subject area.’
In addition to supporting P&R’s stance on GST, she said Gpeg was also keen to address ‘eye-watering public sector pension benefits’, ‘very opaque accounting’ from the States, and encouraging those who have been in receipt of benefits for a long period to become economically active.