What the tax review doesn’t tell you

AS A predictable backlash began yesterday triggered by Policy & Resources’ telegraphed tax proposals, questions were being asked about how inevitable the proposed increases really are.

The reason was treasury lead Mark Helyar’s ambiguous opening comment: ‘This review is about making sure we are clear about how we should raise revenues, if and when we need to. It doesn’t mean we are going to raise revenue now, or even next year, but we may need to eventually.’

When, islanders are asking, might that eventually be, and – crucially – what might defer it?

Earlier presentations to community representatives left little room for manoeuvre. The £75m. targeted is equivalent to the entire annual budgets of all the main States departments, Health and Education excepted, some other committees plus the courts and Law Officers. Add to that the challenges of an ageing population and the case for tax rises appears compelling.

All of which make P&R’s ‘just in case’ approach more perplexing – unless members genuinely believe there is a chance none of its proposed options will be needed.

Meaningful public sector reforms, and the loss of posts, appear to have stalled but others are already highlighting revenue-raising areas the review appears to have ignored – wealth, inheritance and/or capital gains taxes or ending zero-10.

For Charles Parkinson, the need now is to adopt a territorial corporate tax, see what that raises, and then decide whether additional taxes are required.

Elsewhere, there is speculation that the three Crown Dependencies, which adopted a so-called race to the bottom after the Isle of Man was the first to scrap corporation tax, are collaborating on a joint initiative to reintroduce it.

That makes sense given G7 leaders agreeing earlier this year to a global minimum corporation tax rate of at least 15% and Deputy Helyar’s then response that: ‘Guernsey supports the objective of reaching agreement on a worldwide approach, and a level playing field, which will help avoid the complexities of unilateral action by countries’.

Perhaps the tax review is remarkable for what it’s not telling islanders.

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