TRP hike and motor taxes possible if GST is rejected
ISLANDERS could face a big increase in taxes on property and motoring, as well as deeper cuts to services and higher social security costs, if the States reject GST next week.
The proposals are included in an alternative financial plan published today by the Policy & Resources Committee.
It wants deputies to vote on its new alternative plan – called option B – if they kick out the committee’s original option A, which remains largely unchanged.
Under the option B alternative, TRP on domestic properties would go up by 50%, possibly with a deferral scheme for low-income pensioners. Additional taxes on motoring would bring in £15m. a year. Social Security would need to raise more than £30m. a year. And public spending cuts would reach up to £16m. a year.
‘Our committee remains strongly of the view that the best outcome by far for lower and middle earners and for getting public finances back on a sustainable footing is our original propositions,’ said P&R president Peter Ferbrache.
‘Option B is a viable package that can raise enough revenue to ensure essential services, but it is a more blunt approach that does not help those on lower incomes.
‘We’ve put together an option B that we hope States’ members feel they can support, if they really believe they cannot vote for any package that includes GST, no matter how progressive it is overall.’
P&R is making no substantial changes to its preferred option A package. It still includes 5% GST, a 15% income tax band, higher personal allowances and an overhaul of social security contributions to take more from higher earners and less from lower earners.
Option A and option B both include an additional £20m. a year from increasing taxes on companies. They are also both estimated to improve States’ finances by around £85m. a year.
P&R also has a backstop option C which it wants to put to the vote if A and B are defeated.
Option C includes increases in social security contributions and taxes on companies and around £31m. a year of public spending cuts.
‘Essential services are already strained and demand is rapidly growing, especially in healthcare,’ said Deputy Ferbrache.
‘They would be severely damaged by such drastic cuts. I hope the States at the very least do not take us down that path.’
He said that all members of P&R would support option B, if option A is defeated when the States’ landmark tax debate resumes a week today.