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‘Tax review podcast interview was excruciating’

In the latest Politics Podcast interview, treasury lead Gavin St Pier wasn’t at his best. Not by a long way, I’m afraid.

Guernsey Press Politics Podcast host Matt Fallaize
Guernsey Press Politics Podcast host Matt Fallaize / Guernsey Press

One reason why he has always been quite well liked by journalists is that he rarely turns down requests to speak, knows his brief, answers questions openly and intelligently, and accepts that criticism and bad press are occupational hazards of politics.

But my podcast interview with him, about Policy & Resources’ flagship tax review, was excruciating.

Did he accept that corporate tax reform options already published by P&R could raise, using its own figures, only a fraction of the income of GST-plus? Ah, let me tell you about our review of corporate tax.

Did he accept that, even with the addition of agreed savings targets, alternatives to GST-plus discussed so far would not raise the equivalent revenue? Ah, let me tell you about efficiency savings.

And on it went like that. I think asking about the weather or the committee members’ favourite movies or this summer’s World Cup would probably have elicited the same responses. Essentially, here are my messages, and no I won’t deviate from them by taking any notice of your questions.

Listen to the full interview with Deputy St Pier on the latest Guernsey Press Politics Podcast

Deputy St Pier must be distracted and exhausted. In its first half-year, P&R has faced unusual and unrelenting challenges. It inherited arguably the biggest crisis in public finances since the war, lost its longest-serving member in a sordid, criminal scandal, and is now trying to uncover the murky truth of why its predecessors wasted more than £40m. on botched IT projects, with fears that was merely the tip of an iceberg of incompetence. Personally, having spent months fighting a code of conduct recommendation to suspend him from the States, Deputy St Pier is now at the centre of a police investigation into claims of harassment relating to the same case.

In between States meetings, he is on a much-needed break. With its tax review inevitably dominating the months ahead, P&R must hope that he returns refreshed and reinvigorated, with more of his normal energy, focus and imagination, and none of the robotic indifference of our podcast interview.

Of course, this is not only about Deputy St Pier. P&R has five members and collectively their approach to tax policy, initially admirably open-minded, is at risk of drift.

He was clear a decade ago that at some point Guernsey would need a general consumption tax; his colleagues are unconvinced.

He has never believed that elusive reform of zero-10 could be a pain-free alternative; his colleagues seem uncertain what to do with the underwhelming findings of their corporate tax review. He has always been quite muscular on public spending; his colleagues are more hesitant.

The senior committee is rightly determined to retain unity. Its members are experienced and wise enough to know that disunity – certainly anything beyond a 4-1 split – would probably be fatal to any tax package it takes to the States this summer.

They must surely also know there are just two realistic options. Let’s call the first treasury orthodoxy – accept officials’ assumptions about the size of the deficit and fill it with GST-plus and, slightly keeping fingers crossed, Pillar II international tax receipts.

Let’s call the second the alternative approach – reduce the size of the projected deficit, for example by cutting the treasury’s capital spending ambitions which are probably undeliverable anyway, raise a smorgasbord of personal and company taxes alongside Pillar II, demand more on spending restraint across the public sector, and revisit GST-plus in five years’ time if those other measures prove insufficient.

For various reasons, none of the other possibilities sometimes suggested are going to work, alone or in combination. They include major income tax hikes, massive cuts in spending, 1980s and 90s levels of economic growth, corporate tax income of the pre-zero-10 era, deficit denial, and waiting to see if something turns up while borrowing more and depleting reserves.

A way forward, which would broadly maintain unity and reassert a greater sense of direction, would be for P&R to say now, and repeatedly ahead of the summer debate, that it is going to present the States with both of the two obvious packages – the treasury orthodoxy and the alternative – backing one on balance but recommending either as preferable to ongoing indecision and uncertainty.

That approach, as well as allowing more madcap ideas to be ruled out sooner, would also simplify communication over the tough few months ahead, something our podcast interview shows is urgently necessary.

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