Simon De La Rue: 25% reduction in income tax, anyone?

The morning after Guernsey’s parliament finally took the plunge and voted through a consumption tax, I entered a popular St Sampson’s supermarket with my head still swimming with fiscal philosophies, political machinations and economic consequences.

But as I took my trolley and headed for the entrance, it was the public reaction that was front of mind.

There had been previous attempts to overhaul the system that determines who contributes the money that Guernsey spends. These had been preceded with presentations at the Frossard Theatre at Candie, leaflets through our letterboxes and even a protest march. The most recent attempt had led to the downfall of the senior committee and the replacement of Peter Ferbrache with Lyndon Trott as our chief minister. The public had been outraged, it seemed, and had exercised its ultimate authority.

By contrast, this latest attempt seemed to have gone under the radar. Okay, it had been announced on our front page, had been talked about in our letters pages and had attracted several and disparate responses from various people who know about money and economics and that. But, as I mentioned to more than one deputy during the week – take 10 people off the street and five of them wouldn’t know the States were even thinking of changing their minds.

Having followed the debate so closely over the four days, I knew my brain needed a break from it all. I found myself hoping that there wouldn’t be a deputy in the store, doing their shopping – I didn’t want to be cajoled into a conversation in which I’d have to pick over the bones of it all. I felt bruised. I was doing this shop for someone else, in an unfamiliar shop, and – if I was to get to the Capelles in time to register for the speech and drama classes at next year’s eisteddfod – I would need all my available brain power. (And as it turned out, I really would – I mean, who on Earth puts the hummus and the ready-to-eat beetroot on opposite sides of the building?).

But then I thought about the likelihood of any deputy setting foot in a supermarket – or any public place – the day after having collectively said yes to GST. And I recalled Deputy Lester Queripel’s speech on the Friday, in which he explained his own decision to vote yes, when he’d previously said no. He summarised the typical conversations he’d had with angry islanders and accepted that he would receive short shrift from many who would not have the time or inclination to digest his reasoning. He also mentioned, in passing, the three physical assaults he had been subjected to during his time as a people’s deputy. Rather him than me, I thought selfishly, as I waited for someone to step away from the avocados.

I think it was his speech that had prompted me to do something I would normally avoid – I had decided to read the comments below our Guernsey Press Facebook post, which was put up immediately after the relevant vote.

There were a few considered, measured responses but in the main, there was anger and accusation.

‘States members need to find a new island to destroy and leave ours alone,’ was one comment.

The vast majority were along the lines of ‘as usual, the rich get richer’ and ‘Guernsey no longer wants middle class Guernsey people to live in the island’ and there were plenty who vowed never again to vote for the 20 deputies who approved the package.

What struck me was the almost total absence of knowledge about what had actually been approved. I’m not suggesting any lack of intelligence on the part of these posters – just a failure on the part of others to impart some particularly salient facts to them.

Plenty of people have criticised the States and their communications team for failing to spell out exactly what ‘GST-plus’ is, and how it will affect people. I wonder if we in the media are also to blame.

Because whether you are for or against raising taxes instead of slashing services and whether you think GST is better or worse than income tax at collecting in more money, hardly anyone seemed to be aware of what else is in store, alongside the new consumption tax.

I haven’t read all 333 comments (and counting), so maybe I missed it, but nobody was mentioning the prospect of their first £32,000 being taxed at 15% instead of 20% – a 25% reduction in their income tax.

Nobody seemed to be aware that we will suddenly no longer be liable to pay social security contributions on our first £15,000 of earnings.

There was no mention of pensions and income support being adjusted quite significantly upwards – well above inflation – in order to compensate those without incomes for the extra spending in the shops.

There was certainly no mention of the fact that rich people buy more stuff and therefore pay more GST. Nor that the really rich people often don’t need much of an income and therefore won’t be caught by a rise in income tax, whereas they can’t escape GST.

In short, there was no recognition that this package represents an unprecedented redistribution of wealth away from the rich and into the pockets of the less well-off.

There was also lots of talk about cutting deputies’ pay. Okay, we could make them work for free and save £2m. off our £650m. budget. But now only the wealthy can afford to be a deputy and we’re still spending £648m.

We could slash civil service jobs again, like we did under the Financial Transformation Programme, which saved £27m. annually. But if that worked, what fat is left to trim? One of the most common things I hear during States debates is that an urgent piece of work has stalled because there aren’t the staff any more. Maybe there are more staff cuts to be made but it’s a long-term goal. Do it short-term and you’ll need to compensate the summarily sacked (there are laws about these things) and that’ll cost more.

Now, to be fair, it’s several decades since I sat my A-level in economics and I don’t pretend to know as much as the treasury department about the likely macro-economic outcomes they might predict from all the various options with which our deputies were tussling in the budget debate.

I also don’t run a shop.

So I’m not inclined to suggest GST-plus is a good or a bad thing. I’m in the happy position – like all my fellow reporters and columnists in this publication – of not carrying the burden of one iota of responsibility of dealing with the rapidly worsening dichotomy our economy faces. Namely, that people who receive wages are paying for almost everything in our island, that they are becoming a smaller proportion of our population and that we’ve been taking in less money than we spend for a while now. We are running out of cash. We could borrow but then we’d have the interest to pay and the rate will be high if it looks like we’re not investing in our own future. Which we’re not. Indeed, having succeeded in addressing the long-term structural deficit issue with a GST, States members chose not to address the short-term annual deficit problem with a temporary rise in income tax, putting major capital investment in jeopardy, such as phase two of the PEH, the new Les Ozouets campus or the chosen solution to our ‘housing emergency’ – new houses. And if they’re delayed, they’ll all cost way more.

It’s a vicious circle which would be enough to remove the smile from almost any face, even without the further tribulation of four days of often cantankerous postulation.

There was no look of triumph from Deputy Peter Roffey on Friday evening – the left-leaning, soon-to-be-retired politician who arguably put the ‘plus’ into ‘GST-plus’.

He seemed more than a little irritated by Deputy Heidi Soulsby’s failure to say she would back his plan if the income tax hike was rejected. She, equally, seemed discombobulated by his failure to back the income tax rise. Deputy Trott’s mood was severe. It was almost as if he hadn’t believed in GST, despite including it in P&R’s ‘plan 1A’.

But amid all the gloom in the lamp-lit chill of St James Street, there was one beaming smile that could have warmed the cockles of even Ebenezer Scrooge’s dark heart.

Having striven with all his might to deploy his red-ribboned shield to defend the hard-working populace from the GST dragon, one might have expected news of its appearance over the hill to dampen his mood. Not a bit of it. Deputy Carl Meerveld resembled – with his giant anti-GST flag having been kept at the ready all week – a puppy at play at a wake.

A more cynical observer might have erroneously concluded that the deputy who finished 38th at the last election was looking at the result of the debate as some kind of election campaign boost or something.

I knew better. Clearly, I thought, here is a man who recognises when it’s necessary to lighten the mood with irresistible ebullience, despite treading a well-worn path through the Slough of Despond.

Ah well, at least he’s put his hatted head above the electoral parapet, which is more than I’ve done.

When I reached the checkout, the queues were four trolleys deep. I remember thinking it would take a high percentage of consumption tax to dampen the appetite for spending in that store.

But just when I was resigning myself to a long wait and to being a mere spectator at the eisteddfod, a staff member turned up at the empty till next to me and beckoned me forth, like St Peter in the guise of a conveyor-belt transaction operative, summoning me across time and into the sunlit uplands of paradise and retail brevity.

I glided out of the shop on a greased rail of felicity – only to find someone had parked so close to my car that I couldn’t open the driver’s door.

Sometimes, no matter what plans you make, no matter how much or how little you deliberate, your destiny can be defined by events you do not control.