U-turn on ‘fairer alternative’ new option D baffles proposers
LEADERS of the self-styled ‘fairer alternative’ tax plan are baffled by what they see as a sudden U-turn by Deputy Peter Ferbrache.
The P&R president said on Friday that the latest ‘fairer alternative’ amendment – known as option D – was a credible option. But P&R released a statement yesterday claiming that option D was not credible.
‘P&R’s pitch and narrative is changing,’ said Deputy Gavin St Pier, one of the leaders of option D.
‘What the president said on Friday – that option D was a credible alternative and in some ways better than P&R’s own alternative, option B – can be juxtaposed with the press release from P&R saying that option D is not credible.
‘Clearly, there was wider engagement with the rest of P&R, and people can draw their own conclusions.’
Option D is set to be proposed to the States by Heidi Soulsby as the Assembly resumes its landmark tax and spending debate today.
‘We simply do not believe the case has been made that the big bang approach put forward by P&R is needed,’ said Deputy Soulsby.
‘Consequently, we do not need to raise an extra £85m. from businesses and households in the next couple of years.
‘P&R’s assumptions of the structural deficit are based on nothing changing between now and 2040, when the truth is government should be looking to the future and planning a course for the island.
‘The lack of strategic thinking will just see us drifting to 2040, but without any common purpose. A strategic vision is required on which we can determine services needed, our tax base and the revenues to be raised from that tax base.’
Deputy St Pier said that option D would probably be the final amendment put forward by the ‘fairer alternative’ group of deputies.
Their original alternative tax plan was defeated by 16 votes to 24 last month.
‘We believe that, should our proposals not succeed, there is a very strong likelihood that we will see nothing constructive come out of the Tax Review debate,’ said Deputy St Pier.
‘This uncertainty could be harmful to Guernsey and that is why we are persevering in putting forward our own composite amendment.
‘We are striving through option D to find a consensus that ensures some positive decisions are made this week. The nature of consensus is it will not be everyone’s first or preferred choice, but in this case it will be far better than throwing everything out.’
Options A-D and what they will mean to the tax-paying public
Option A (P&R’s preferred model)
. 5% GST on nearly all purchases to raise £67m.
. Restructure social security contributions to raise £19m.
. More tax from companies to raise £20m.
. Reductions in States’ spending to raise £10m.
. New 15% band of income tax plus higher personal allowances plus ongoing support measures at a cost of £30m.
Option B (P&R’s latest alternative)
. Restructure social security contributions to raise £34m.
. Increase TRP on residential properties to raise £5m.
. Increase taxes on motoring to raise £10-15m.
. More tax from companies to raise £20m.
. Reduction in States’ spending to raise £10-16m.
Option C (P&R’s original alternative)
. Increase social security contributions to raise £34m.
. More tax from companies to raise £20m.
. Reductions in States’ spending to raise £31m.
Options A, B and C are estimated to improve States’ finances by around £85m. a year
Option D (Deputies Soulsby and St Pier’s latest ‘fairer alternative’)
Requires the States to suspend its rules of procedure before it can be debated. It is understood to include restructuring social security contributions, a new levy on the corporate sector, tax increases, including from the open market and adjusting the tax cap, and reductions in States’ spending.
There would be a second stage of changes from 2026 following a wider review of tax and spending.
It is estimated that option D would immediately raise around half the amount proposed in options A, B and C.
