The group claims Guernsey’s government is taking a bigger percentage of the local GDP in taxation, and other income, than the limit it agreed to in 2020.
Gpeg said it does not know by how much the rule is being broken by, because of the problems with the IT system at Revenue Services, but estimates it must be by at least £23m., calculating the figure by using the previously-agreed cap on States’ income of 24% of GDP.
Treasury lead Deputy Charles Parkinson said that while the claim may be technically true, it ignored the reality of what had happened to cause it.
‘One of the reasons we’re trying to revise the Fiscal Policy Framework is to precisely avoid the sort of claim that Gpeg has made. We knew that GDP had been restated downwards and that put us at risk of a breach – the important distinction though being that this is because of a technical change, rather than an actual increase in taxation.’
Gpeg, which has described the original proposal for a framework as ‘a fiscal colander’, has also accused P&R of ignoring a States resolution instructing them to update the financial rules.
In January the committee was directed to return with a revised, stricter framework by 15 July.
‘In the general chaos of the tax package and GST proposals, this has not been done. A classic example of the States changing the rules rather than following them.’
In response P&R said that the deadline was unrealistic. It had always made that clear and told the Scrutiny Management Committee, which originally forced the U-turn, that was the case.
‘As we advised during debate, there is a substantial amount of overlap between the fiscal policy work and tax reform, not least that it requires the same very small team of staff to do the work,’ it said.
‘We’ve prioritised based on the resources we have available in the way that we said we would, and that means the Fiscal Policy Framework won’t be addressed until later in the year.’
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