OPINION: Will ‘Fairer Alternative’ get a fair fight?

Deputy Gavin St Pier looks ahead to this week’s tax review debate – and wonders what impact personality politics might have on voting.

IT IS an established part of Guernsey’s political tradition and history that each States is the worst ever. Well, until the next one. There is a fair prospect that by the end of the Tax Review debate during this week’s States meeting, there will be evidence to seal the deal for those who have not yet reached that conclusion of the present States.

Before we get to that debate, the States of Election – comprising deputies, jurats, crown officers and parish representatives – needs to meet to elect a new jurat. That will be followed by the regular slot for statements. This month, one of the Alderney representatives will deliver an update before facing questions from the rest of the Assembly. Realistically, the main business of the meeting will not begin before lunch tomorrow.

The next issue will be whether to re-order the agenda to deal with the Tax Review first by further deferring the uncompleted business from the meeting just before Christmas. Awaiting debate, the Development & Planning Authority has its policy letter recommending new powers to order owners to tidy up their land and there is an opportunity to discuss the 2021 Guernsey Post accounts. This latter item might provide a chance for Deputy Helyar and those others who are unhappy with the governance around the trading companies to pitch their concerns.

Deputy Gavin St Pier. (31708043)

The Tax Review debate is unusually being led by the president of the Policy & Resources Committee, not its treasury lead. So Deputy Ferbrache will open the debate, no doubt with one of his classic lengthy openers, including an anecdote or two to remind us that he qualified as an advocate on his 21st birthday, all to explain that having run out of runway (in the absence, so far, of proposals from Deputy Inder to lengthen it,) cans cannot be kicked any further. As soon as he’s seated, the Duce of can-kickers himself, Deputy Meerveld, will pop up with a sursis, which would direct P&R to pause-and-review until December 2024.

This will fail but, irrespective of the outcome of the whole debate, Deputy Meerveld has already achieved his main objective ahead of the general election in 2025, by anchoring himself in the voting public’s mind as the pom-pom waving cheerleader (in a hat) for anyone who doesn’t like a goods and services tax. This simple position of opposing does not, of course, require anything so messy and complicated as a constructive alternative.

It is not clear what order the amendments will be taken in but next up is likely to be Deputy Soulsby or Deputy Parkinson, both of whom propose replacing all P&R’s ideas with their own.

In Deputy Parkinson’s case, he’s banking at this stage on the single bullet solution of a territorial form of corporate income tax. To be fair to him, he’s been both consistent and unwavering in his views since the original zero-10 debate back in 2006. As the rest of the world evolves international tax rules to develop minimum effective rates of corporate tax in each territory, it does seem likely that, one day, he will be proved right. The question for the Assembly is whether ‘one day’ has been reached. With strong opposition from business groups and the disadvantage of having taken everything else – including social security reform – off the table, the Assembly may well baulk at taking this plunge. If so, this then leaves Deputy Soulsby’s package as the only constructive alternative for those who don’t want GST.

As the seconder of this Fairer Alternative amendment, I have an interest in its success. While retaining the reform of social security contributions, it’s a balanced blend of spending cuts (£9.3m.) and restraint, public sector pension reform and revenue raising (£15.1m.), including the corporate sector sharing more of the burden with an immediate £10m. community & infrastructure contribution. The overall package closes the structural deficit by £62m., £7m. more than P&R’s package.

P&R’s plan of course raises more tax through GST (£67.7m.) – albeit at an ongoing cost of £2.6m. a year – but immediately recycles £29.3m. back to taxpayers in ‘mitigation’ with a lower income tax band and higher personal allowances. In summary, for every £1 in GST collected, after you’ve deducted the costs of administration and mitigation, the treasury will receive only 53p. That is not an efficient tax model.

The Fairer Alternative would also create two new special committees. One to look at spending and the size of government and the other to look at further corporate tax measures, including Deputy Parkinson’s territorial tax idea. Although which five members would make up each special committee would become a decision of the February States’ meeting rather than this one, the concept will be seen by some as a threat to P&R. In the normal course, the coalition could be relied upon to come together to stack each committee with whichever five members (however unsuitable) they so choose. But the tax review has strained the bounds and bonds of the Blob like nothing else so far in this term.

Commitments that P&R thought it had from members to support GST, whatever they might have said at the general election, may not be honoured. Those commitments appear to have been obtained on the back of a combination of carrot and stick – a little more funding for some areas, with the flipside being a threat to some projects, if GST is not voted through. All of this risks the debate being ill-tempered. Accusations of political cowardice may be levelled at those who are seen to have been swayed by the strength of public opinion, no doubt represented in force on the steps of the Royal Court tomorrow morning.

Sadly, the real weakness to the Fairer Alternative succeeding is not what it contains but who is presenting it. On any objective analysis it is a balanced, credible, well-researched package. But for many in this Assembly, they would rather tread in doggy-do than vote for an amendment, however worthy, which has been laid by Deputy Soulsby and me – the epitome of personality politics. And therein lies the maximum threat to P&R and this States. Given GST is clearly dead on arrival, rather than embracing a positive alternative, it’s entirely possible that the States will throw everything out. If it does so, there will be nothing to show for 30 months’ work and not enough time in the remainder of this term for P&R to build its credibility and return with a new package. But at least this States will have earned its title as the worst ever.

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