‘We should let P&R get on with it’

TAX, where are we now?

I have to say that much of the discussion following last week’s States Assembly meeting is far too negative.

Although the Policy & Resources Committee lost their preferred option A with their GST proposal, they are by no means unable to continue, as Deputy Charles Parkinson suggests. All committees lose votes from time to time.

In my view the current committee are clearly best placed to continue with a sensible programme of budget efficiencies, possibly along with smaller tax increases. They are all intelligent and hardworking and clearly would easily win any vote of confidence in the Assembly.

Their proposals were well presented but they made a misjudgement on one point. Although I did not vote for their preferred option, I did, along with eight other deputies, vote for one of their secondary options, C (the one that emphasised expenditure savings). It’s a pity that we did not have more votes for that. I think it was the most sensible and goes with the grain of middle Guernsey who are tired of tax increases.

What has been overlooked is that the committee can make headway under the powers they fully retain and it should be noted that the States did not agree to nothing. Although the headline proposals failed, many secondary propositions succeeded and, in sum, they amount to significant proposals for the committee to work with. These include:

u A review of capital expenditure and accounting in respect thereof.

u A sub-committee to review the provision of services, efficiencies in service delivery and operating models for trading assets with a view to saving £10-16m. over five years.

u The establishment of a sub- committee to review the tax system, including corporate tax and anti-tax avoidance measures.

u Review motor taxes, fuel duty, annual registration fees and distance charging (not that, please).

u Raising fees from the visitor economy (I’m not so sure about that).

u Following an excellent amendment from Deputy Leadbeater, a review of tax and benefits with a view to encouraging more people back into work.

And there are others.

In summary, P&R has correctly identified long-term issues in terms of spending versus income, which must be addressed. They are doing their job.

Underlying that is the fact that over the last decade or so we have increased spending in real terms by 2% per annum (pa) or so, while growth has been at 0.5% pa, clearly an unsustainable path. So we have to worry about growth. Thus we cannot just increase taxes again and again as higher levels of taxation reduce growth and make us all poorer over the long term.

The States recognised that in general terms by not voting for the GST proposals in option A and, much worse, the tax proposals in Deputy Peter Roffey’s option E.

However, the States has made proposals for a way forward, which P&R is best placed to deal with. Indeed, they are already dealing with some of the main issues, including civil service pay and conditions.

We should let them get on with it.

Our current spending seems to be broadly in balance (depending on how we do the accounting) so our problems do not amount to a crisis, but they are clear, serious and unavoidable in the near to medium term.

Demographics are not helping, with Guernsey’s ageing population.

We do need to get on with it, starting, in my view, with a serious attempt to reduce spending and to stop adding additional spending streams.

We deputies must start to throw out any proposal for additional spending that is not absolutely necessary, nice as the proposals may seem, and whatever the special interest pressure groups may say.

We absolutely must realign spending growth with growth in GDP or, long term, we will be dead in the water.

In short, we should not be too despondent. Neither the States nor P&R is ‘kicking the can down the road’. Nor are we ‘the worst States ever’.

Let’s support our P&R Committee in getting on with a stressful job. They are not in it for the money, that’s for sure.