Compromise option may take GST off the table

An Option D began to emerge late last week as another compromise solution, involving immediate spending restraints, a corporate levy and further exploration of territorial tax and capital spending policy.

Three days of debate in January ended with stalemate, as various attempts to take a goods and services tax off the table failed.

Debate will resume on Wednesday, with Policy & Resources’ preferred suite of proposals – GST at 5%, a 15% income tax band, social security reform and increases to pensions and benefits – still to be voted upon.

• Podcast: Simon De La Rue is joined by Deputy Peter Ferbrache and Deputy Gavin St Pier to discuss the options on the table

These are now being presented as Option A, while an alternative P&R set of proposals, which excludes GST, is being presented as Option B. This includes a 50% increase in property tax, some cuts in committee budgets, a motor tax and paid parking.

An Option C has also been published which, by common consent, acts as a description of the severe consequences – in terms of service cuts and increased social security payments – if the first two options fall.

Speaking at the end of last week, Chief Minister Peter Ferbrache and his predecessor, Gavin St Pier, said they had discussed, with Deputies Bob Murray and Heidi Soulsby, a plan of action designed to ensure that P&R’s original proposals received an airing early on in the process.

If – as expected – they fail to win support, a compromise Option D would follow, which Deputies St Pier and Soulsby are hoping to draft in such a way as to garner support – or at least, acceptance – from P&R.

‘I think we’ve found a lot of common ground,’ Deputy Ferbrache said.

‘The likelihood is that P&R will still continue with Option A, but if Option A failed, we’d have an Option D and it may be that that’s got a lot of attractiveness – we may jump from Option A to Option D. There’s a lot of good stuff in it.’

He did add the caveat that he had first seen it less than two hours prior before the two politicians met on the Guernsey Press Politics Podcast, and he had not yet had a chance to discuss it with Deputies Mark Helyar, Dave Mahoney and Peter Roffey.

Deputy St Pier said Option D would include immediate restraints on spending and social security reform, alongside the revenue-raising measures previously outlined in the so-called ‘fairer alternative’, such as the corporate levy.

Longer term, further examination would be undertaken into capital spending policy and a territorial tax.

‘We have adapted in light of the feedback we’ve had from States members – through the debate – and from the community,’ Deputy St Pier said.

It is still possible that States members will vote against all of the options being presented. This would mean that social security contributions would continue to increase annually for the next eight years, following a plan of hikes already agreed in the States.

This would bring in an extra £34m. However, there would be no other measures in place to reduce an anticipated gap between the tax take and predicted future spending, which it is thought will increase to £100m.

Both Deputies Ferbrache and St Pier said they would regard that as among the worst possible outcomes.