Political support is said to be swinging behind Policy & Resources’ plan to hold down public spending and introduce a 3% goods and services tax together with new motoring charges and reductions in income tax and social security contributions.
P&R member Andrew Niles told the latest Guernsey Press Politics Podcast – out today – that the senior committee was now heading for a decisive victory in the final vote on its controversial proposals.
‘Looking at the numbers, I think that when we reach the end of the debate it won’t be that close,’ he said.
The States’ landmark fiscal debate will resume next week, following the Assembly’s summer adjournment, after it ran out of time to complete business at its last meeting two months ago.
‘I am not a betting man, but looking at where we are at this stage of the debate, and the voting trends from July, I’d say the broad Assembly wants us to achieve a package of tax reform. That’s where they want to get to,’ said Deputy Niles.
‘You could see that from the votes to remove certain key elements of the package, which were overwhelmingly lost.’
It is now six years since a previous P&R warned of an emerging black hole in public finances. That deficit is now projected to become anything between £50m. and £100m. A year. The last States held three lengthy debates on the issue without agreement before eventually backing the GST-plus tax package but running out of time to introduce it.
Deputy Niles, one of the few openly pro-GST candidates successful at last year’s general election, said that most politicians and voters now ‘understand’ that the time for prevarication has run out and the island needs the States to settle on a tax and spending plan and move on to other important issues.
‘What I always worry about is that we push ourselves to try to create perfection on day one rather than moving forward quickly,’ he said.
‘Industry does not approach fiscal pressures that way. It understands it must keep moving and keep making decisions.
‘If we keep trying to perfect it, we’ll simply run out of money.’
P&R has produced models showing that its proposed package – in particular a new 15% band of income tax and a personal allowance on social security contributions - would leave the less affluent half of the island better off than they are at present while substantially increasing tax revenue from the more affluent, non-resident businesses and visitors.
In a wide-ranging podcast interview, now on the Guernsey Press Politics Podcast feed, Deputy Niles said the plan was ‘as painless as we can make it’ for the island while improving States finances and raising adequate revenue for public services and capital projects.
Amendments against P&R’s policy letter must be submitted by 3pm tomorrow to be certain of being debated when the States reconvenes on 30 September.
Between 25 and 40 amendments are expected, increasing the potential for the debate to remain unfinished at the end of the three days set aside next week. It would then be pushed into the following States meeting, which starts on 21 October, before which another window will open for further amendments to be submitted.
‘There is no point trying to curtail democracy in the way the States wants to debate. We will debate for as long as it takes,’ said Deputy Niles.
However, P&R is increasingly facing up to the risk of running out of time to introduce all elements of its tax and spending package at the start of 2028, even if it is approved by the Assembly.
Deputy Niles revealed that the senior committee had started considering how it might introduce GST, which will cost ever resident more, separately from the income tax and social security changes designed to lessen the impact of GST.
‘That is something we have discussed with the head of the public service [Boley Smillie] and within P&R,’ he said.
‘We don’t want to second guess where we end up, but the whole process of tax reform and broadening our tax base is something that will put us in a better position for decades to come.
‘I don’t think we need to be fixated on doing both simultaneously.’
Hear from Deputy Andrew Niles on the latest Guernsey Press Politics Podcast. Listen now wherever you get your podcasts, including Apple Podcasts, Spotify, or at guernseypress.com.
Hear from Deputy Haley Camp, who is opposed to P&R’s tax package, in the next Guernsey Press Politics Podcast, out tomorrow.