Plans for major tax rises face the threat of growing opposition in the States over concerns about public spending controls.
Policy & Resources has become less optimistic about finding alternative ways of raising revenue and increasingly resigned to the need for a goods and services tax, possibly in conjunction with a new company tax regime, as it battles to fill a black hole in States finances projected at nearly £100m. a year.
The GST-plus tax package would raise more than £50m. a year. It also includes reductions in income tax and a new personal allowance free of social security contributions, leaving most lower- and middle-income households better off, according to treasury figures.
But several deputies who previously voted for GST-plus, or indicated they were prepared to, told the Guernsey Press that their support was now hanging by a thread.
Andrew Niles was certain that he would not vote for GST-plus if it was to fund continued growth in public expenditure.
‘I do not believe it is responsible to introduce new, broad-based taxation without a credible and explicit commitment to expenditure restraint. The public won’t accept it,’ said Deputy Niles.
‘If government is asking the public to contribute more through GST-plus, it must demonstrate that it is also prepared to do the hard work of prioritisation, efficiency and reform within the public sector. Revenue measures and spending discipline must move together.’
Expenditure overall grew faster in the previous political term than it had for two decades. The treasury lead during the first half of that term, Mark Helyar, has spoken previously of his frustration about what he saw as weak spending controls across the organisation.
Despite impressively holding his seat after leading proposals for GST-plus, he revealed he was now ‘very unlikely’ to vote for a similar tax package without a major change of thinking on spending.
‘If we can’t control spending then it is pointless raising more tax,’ said Deputy Helyar.
‘I would personally rather face government collapse and go into a phase of substantial reform than destroy our economy.’
In November, the Assembly voted 13-25 against Scrutiny president Andy Sloan’s 2026 Budget amendment to freeze spending at 2025 levels.
On the face of it, that vote indicated that most of the Assembly trusted P&R’s approach.
However, several of the 25 members who voted against freezing spending have previously been hostile or sceptical towards a consumption tax, suggesting that the senior committee may have a wafer-thin majority, or possibly no majority at all, for its preferred emerging fiscal approach.
Deputy Sloan admitted it was ‘getting harder’ to back GST-plus without more focus on spending restraint, and that P&R may increasingly struggle to secure a majority for the former without the latter.
‘The message from the electorate was no stone unturned before GST. I’ll be frank, I don’t think we’ve even picked up a single stone,’ said Deputy Sloan.
‘People like to use the phrase “efficiency savings”. I’m happy to call them spending cuts. We’re a population of 60,000, not 60m. There are things we just can’t afford.
‘One big difference between 2008 when I joined the States as a civil servant and 2025 when I was elected as a deputy is culture and mindset. The default now is big government, frankly almost big brother, thinking. As a small island jurisdiction, we don’t have the scale to take that approach. It just undermines our economic competitiveness.’
None of P&R’s five members voted in favour of GST-plus in the previous Assembly. Any who do this year will have made the same voting journey a small number of their colleagues have previously, including Sasha Kazantseva-Miller.
She hoped to see ‘a clear programme of savings and efficiencies’ agreed in this political term, but was more relaxed about whether they should be presented as part of the tax-raising debate expected this summer or separately.
Deputy David Dorrity said he would vote for GST-plus as a standalone proposition, but would prefer to see it presented with spending reductions.
‘I would not be comfortable with GST‑plus being introduced without a clear commitment from the States Assembly, its committees and the civil service to pursue efficiencies and identify areas within their remit where meaningful savings can be achieved, along with the necessary reductions to current spending levels,’ he said.
‘P&R can’t bank on our votes’ – Inder
Two weeks ago, treasury lead Gavin St Pier received an email which provided any reminder he needed of the difficulty of steering major tax rises through the States.
The author of the email was Neil Inder, one of the few prominent supporters of GST-plus in the last States who held his seat at last year’s general election.
As experienced deputies, both men know that a large part of politics in the Assembly is building coalitions to secure a majority of votes, and that without the backing of its previous supporters the GST-plus package faces being derailed again.
‘What I told Gavin and what I’m saying now is that Policy & Resources can’t bank on our votes,’ said Deputy Inder.
He would like to see what he called ‘a kind of compact between the States and the people’ which would guarantee spending reductions from next year alongside the tax package to balance the books.
‘I expect P&R and other committees to land on real savings which the public will accept. We bloody well can do it if we want to do it.
‘The one thing deputies control is the budget.’
Deputy Inder said he had proved it was possible by reducing spending at Economic Development by 2.6% when he was its president in the previous States.
‘If there is a budget line of £1m. and politicians direct that it should be reduced by 5%, that is the end of your job right there. You give the staff the direction and they get it done. That is where you need strength of leadership.
‘We need to see more leadership, or at least some leadership, on our fiscal direction.’
Deputy Inder was concerned that well-meaning but less significant issues scheduled for debate by the States could distract attention from dealing with the island’s financial problems.
He cited proposals to review legislation on drugs and relax laws on body piercings as examples.
P&R recently submitted a policy letter inviting the States to include or exclude food should GST be introduced later in the political term, while maintaining that it had not yet decided whether the GST-plus package should be introduced at all.
‘I already know that they have come to a position on GST-plus. They are taking us for mugs,’ said Deputy Inder.
‘Please lead. It’s not about keeping the job, it’s about doing the job.’
Charges for some services ‘more palatable’ than tax rises?
Tighter controls on public spending could help Policy & Resources get major tax rises through the Assembly and in place before the next general election.
Opponents or sceptics of GST-plus, the previous Assembly’s preferred tax package, generally polled better at last year’s general election, but some of them have since reportedly modified their views.
David Dorrity believed those deputies’ votes could be key in finally getting GST-plus across the line – but they may come with one major condition.
‘A number of deputies who were previously opposed to GST‑plus have told me that, since joining the Assembly and gaining a clearer understanding of the island’s dire financial position, that they are worried about the state of our finances,’ said Deputy Dorrity.
‘I believe some of these deputies may now be prepared to support the package, but only if there are firm assurances regarding efforts to tackle waste within government and the introduction of strict measures to control spending.’
Deputy Dorrity would like to see a three-pronged approach to tackling an estimated £98m. a year black hole in public finances – GST-plus, user charges for some services, and zero-based budgeting across the States.
Scrutiny president Andy Sloan was unconvinced by the calculations behind the figure of £98m. and questioned whether it kept growing largely because of political choices to increase expenditure.
He saw the future of healthcare – the States’ single largest area of spending – as the key issue facing the Assembly.
‘The States has got to get better control on healthcare. This demography excuse [an ageing population] is used as a free pass,’ said Deputy Sloan. a former States economist.
‘When I directed the report into long-term health and pension projections back in 2012, my point was that we needed to avoid this coming to pass, not that we’d just keep hiking taxes to pay for it.’
He was encouraged by the Health & Social Care Committee’s openness to rethinking its funding model and said his Scrutiny Committee had discussed ‘how we might be able to help HSC look at this issue’.
Former treasury lead Mark Helyar, now president of the States Trading Supervisory Board, was pessimistic that substantial savings would be found without widespread reform of the public sector.
‘While the service is checking its own work, everything is simply treated as a priority, so the machine will find very little to save,’ he said.
‘A £50,000 invasive species officer or very expensive electric buses or dog daycare regulation should just not be happening in this financial environment, nor should above-inflation pay rises, but there does not appear to be anyone who has the power or willpower to say no to more expense.’
Deputy Helyar also hoped that the package eventually agreed to deal with the black hole would include reconsideration of the benefits system and charging some users who could afford to pay for services currently provided without charge.
‘We have to draw a line under the size of government and roll it back in several areas, or spending will continue to rise,’ he said.
Deputy Andrew Niles pointed to treasury figures indicating that the States would still have a budget deficit today of approximately £25m. a year even if the GST-plus package was fully in place.
‘I believe that scale of efficiency is challenging but achievable if approached sensibly and over time, focusing on structural reform rather than blunt, short-term cuts,’ he said.
‘Without GST-plus, the scale of spending reduction required would be significantly larger and, in my view, politically and operationally unrealistic without materially impacting frontline services.’
Deputy Sasha Kazantseva-Miller suspected that budget reductions could be delivered rapidly only with cuts to services but believed efficiency savings could ‘make a more important impact’ in the medium- and long-term.
She also thought that introducing or increasing user charges for some services ‘may be more palatable to the population’ than continuing tax rises.