P&R hits back at ‘untrue’ tax claims
POLICY & RESOURCES has hit back at claims of a £50m. hole in its tax plans – dismissing them as ‘untrue’ and ‘deeply misleading’.
The senior committee said that deputies making the claims – who include its former vice president Heidi Soulsby – were damaging the credibility of the whole States and needed to be honest with the island.
The self-styled ‘fairer alternative’ group of deputies, who will put forward their own tax plans at next week’s key States debate, claim to have obtained figures showing that P&R’s proposal for a new goods and services tax would cost the States more than £90m. within 12 months of being introduced.
P&R’s own estimate earlier in the year was that the first-year costs would be £40-42m., including about £30m. in income tax and social security changes to help less affluent islanders.
‘The claim that GST would cost more than £90m. is based largely on the false assertion that it would involve a £50m. cost to taxpayers because of its effect on public sector employees’ pensions,’ said P&R this morning.
‘The first-year introduction of GST would have a one-off inflationary impact of approximately 3.5%, which is fully acknowledged in [P&R’s] funding and investment plan and which would wholly or partly flow through to increases in salaries and pensions in payment.
‘That would lead to a funding strain of approximately £50m. However, such a strain on its own is extremely unlikely to require any specific action or additional expenditure.
‘The roughly £1.5bn superannuation fund for public sector pensions, which was fully funded at the last valuation at the end of 2020, would see a small dip in its total value which is unlikely to require any action or additional funding.
‘Increases and decreases of this order on a fund of this size are par for the course and it is misleading to present them as an additional cost, hidden or otherwise, to the taxpayer.’
In February, the States rejected P&R’s tax plan by 25 votes to 15.
Deputy Soulsby’s alternative plan, which excluded GST, was defeated only on a tied vote.
Deputy Soulsby and her colleagues behind the ‘fairer alternative’ amendment believe that the additional costs of GST which they claim to have uncovered could influence the outcome of next week’s States debate when rival tax plans will once again go head to head.
P&R said today that it welcomed challenge to its proposals but would not sit back and accept untruths.
‘P&R would urge anyone opposing the proposals to be honest and transparent with the community about the facts,’ it said.
‘It is not acceptable to omit information and mislead the community to suit a political narrative.
‘It harms the credibility and reputation of the States as a whole, regardless of the outcome of the debate.’
P&R believes that the ‘actual costs’ of introducing GST would be limited to around £2.5m. to set it up and £2.4m. a year to run it.
It also wants to spend about £8m. pre-emptively increasing old age pensions and social welfare benefits to make sure islanders on low incomes are not adversely affected by the immediate inflationary effects of introducing a new tax.
The deputies behind the ‘fairer alternative’ amendment have recommended that taxes should be increased on companies, vehicles, tourists and the island’s wealthiest residents instead of introducing GST.
