In a tersely worded statement, the group dismissed P&R’s claim that the tax changes, including a 3% consumption tax, are required to support spending on public services and the island’s infrastructure.
‘Actually around one third of the tax being raised is not to fund services or infrastructure. It is to improve the economic status of our less well-off.
‘The funding gap has been difficult to see because multiple redefinitions of “surplus” have been used and the structural deficit is not a well-understood concept. There would be a lot less of a gap if we had not suffered bungled capital spending (IT, hospital etc). No one can doubt that civil service inefficiency and the growing complexity of administration of steadily growing legislation and regulation has contributed to the “gap”.’
Gpeg is also very dismissive of the committee’s plan to build into law the requirement for the mitigations contained in the tax package to at least maintain their true value.
‘This seems very odd – the States can obviously vote for mitigations – and abolish them. A useless time-wasting gesture.’
The pressure group says that instead of taking the opportunity to simplify Guernsey’s tax system, P&R’s proposals just add new layers of complexity.
‘We are a small island and adding to, or changing, taxes and benefits generates complexity we could do without. This package contains five new taxes and well into double figures on meaningful changes. There are no simplifications or abolitions.’
In its policy letter P&R admits that the introduction of GST will add about 1.9% to the cost of living but the think tank does not believe they have been transparent enough about the knock-on costs of that inflation.
‘On a wages bill of £415m., 1.9% inflation would add £8m. For States pensions being paid of £177m., 1.9% would add £3m. Inflation will also increase the cost of the States defined benefit pensions which are index-linked.’
P&R has offered two core reasons for its tax proposals. The first is a funding gap of £50m., and the other is a need to broaden Guernsey’s tax base and make it less reliant on taxes and contributions largely paid by the working population, but Gpeg appears to give that argument short shrift.
‘Apparently too much reliance on income-based taxes is risky, so wealth needs to pay more of the taxes.
‘Nowhere [in the policy letter] is it recognised that higher taxes on financial services businesses and on elderly high-net-worths carry a serious risk of emigration of these highly desirable taxpayers.
‘We prosper in part because we are known to have had stable low taxes. People will notice higher and more numerous taxes.’
The group also dismisses the part of the package which promises £20m. worth of efficiency savings, claiming that history shows they will not actually be achieved.
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