Both deputies Liam McKenna and Gary Collins have now gone public on how they will attempt to alter the official proposals, with ideas including a referendum, a new States committee to look at the issues of taxation and public spending again from scratch, a motion to delay any discussion for a couple of years to allow for improvements at the income tax department, and even threats of a motion of no confidence in P&R if it loses the debate later this month.
Deputy Lindsay de Sausmarez said she was not impressed.
‘I don’t think we can afford to delay any further. We have got an economy that needs certainty and investment. We have got a housing crisis which needs us to be able to invest in new housing stock. We’ve got people struggling under a cost-of-living crisis, and I don’t want to spend this political term, like previous political terms, just going around in circles.’
Nor is the P&R president sympathetic to the argument that any introduction of GST should wait until the well-documented issues at the Revenue Service have been resolved. She claimed that a new consumption tax would be much easier to administer than either Income Tax or Social Security contributions and that it was a key part of the proposed reforms.
‘We really have to think about why GST is part of this package. It is the mechanism by which we can raise the money from corporates, from visitors, from the wealthier residents in the island, to provide a significant tax cut to people on average and lower incomes who could really do with a bit of help with dealing with the cost-of-living at the moment.’
She said of Deputy Collins’ idea about a new ‘Appropriations Committee’ that looking at every other possibility to raise revenue and reduce spending was worthy, but the work had already been done.
‘We have spent the first year in this Assembly turning over every stone. We have been very thorough. We set up the tax review sub-committee, and of course we engaged comprehensively with industry bodies, with interest groups, with community organisations, and with political colleagues.’
But one of those colleagues, Deputy Collins, does not agree with that assessment.
‘What I’m saying to P&R is thanks for doing all of that homework for the last year but unfortunately it’s a D minus. And I feel for P&R when I talk to the members of how much we’ve put on them. In 2016, I was part of the States that said we’re going to take the finance part of the States and the policy part of the States and put them together, and tell five members to get on with it.
‘When you look at the amount they have to do, no wonder they’ve not had time to really go into the depth of really everything that the public expected.’
Deputy Collins said he believed that P&R has been set up to fail, and so would be unlikely to back any kind of motion of no confidence.
‘I’m saying, look guys, you’ve already got a busy day job. So we’re going to give it to another bunch of deputies, with officials, to go away and do that and come back.’
While they do not form part of his amendment, Deputy Collins also has some very radical ideas which he would like his proposed new committee to consider, including scrapping Income Tax and Social Security contributions and replacing them with an Employment Tax instead.
That tax would all be collected through the ETI system, with personal income tax returns no longer required, something he claims would save tens of millions of pounds in administration, and it would also mean that pension income and bank interest were no longer taxed.
The same would be true for rental income, but instead the deputy wants private landlords to pay a levy of £2,000 a year per unit of accommodation they let, which he estimated would raise £14m. a year. He also wants to double the tax on real property and increase the Employment Tax allowance to more than £20,000.
Deputy Collins accepted that some people might consider he was thinking the unthinkable.
‘I totally get that this is radical. I’m not saying it isn’t radical, but on the other hand, when you start breaking down and looking at it, there are mitigations. You could also say, is it time that if pensioners aren’t paying tax any more, should they be getting free prescriptions any more, or £12 when they go to the doctor, would they still need it?
‘There are small things to readjust that balance. And if you do the numbers, the package I am proposing would actually bring in that extra £43m. that P&R are trying to get.’
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