The message comes from the president of the Policy & Resources Committee, in response to a suggestion from Deputy Rob Curgenven that the new tax might actually end up costing the public purse money, rather than raising any extra revenues.
As part of that calculation he suggested that it will cause the States pay bill to rise by £8.2m., based on the estimated 1.9% inflationary impact of bringing in a 3% consumption tax.
But in a letter of rebuttal, Deputy Lindsay de Sausmarez said it is wrong to automatically factor that cost in.
‘On pay/pensions, you have assumed this will be an automatic uplift, but that’s not the case: there’s no more a guarantee of an inflationary uplift in public sector pay than there is in private sector pay.
‘Also, a majority of public sector workers will – like the rest of the community – be better or no worse off as a result of the package of measures, which mitigates against that element of inflationary increase.’
In response, Deputy Curgenven accepted that it is theoretically true that States wages will not automatically go up to compensate for GST, but was cynical over the likelihood of them not doing so.
‘Practice over many years has been to make pay awards which track inflation over any extended time period, and the unions representing public sector workers have previously brought claims in the Industrial Disputes Tribunal when unsatisfied with the pay awards on offer (something which is unheard of in the private sector).’
He went on to ask for confirmation if it was P&R’s intention that a real terms pay cut should be imposed on public sector workers if the proposed tax package is adopted.
Elsewhere in Deputy de Sausmarez’s letter, the P&R president pointed out that Deputy Curgenven was wrong to include a figure for what the States will pay in GST in his calculations.
She said the original P&R forecast for the amount the tax would raise excluded both the States payments and its receipts from those payments as they balanced each other out.