Claims that the impact of introducing a goods and services tax can be mitigated on the least well off by increasing personal tax allowances need to be treated with caution. Such figures as are available suggest significant numbers of people already experience in-work poverty.
Research by the Scrutiny Management Committee showed about 15.5% of all islanders had a household income below the 60% median figure and yet were not in receipt of income support. They were doing what society demanded – working hard – but still couldn’t make ends meet and now face punitive increases in the cost of feeding and clothing their families.
There is a growing anger that ‘middle Guernsey’ and below are being targeted as cash cows to make up for government profligacy, and that the tax ‘review’ lacked the necessary rigour to establish the correct options have been identified.
The politician taking the flack for the package, P&R treasury lead Mark Helyar, also seems to be struggling with the fall out – suggesting means-testing old-age pensions to which recipients and their employers have been forced to contribute is clearly a comment of desperation.
The inflationary consequences of GST will sweep throughout the island, trigger wage demands – especially in the public sector – and make the island even less cost-competitive for visitors.
Taxing consumption may broaden the base from which States revenues are drawn but, mitigation or not, it does so by widening the gap between the haves and the have nots. An extra 8% on a Rolex is neither here nor there for the purchaser, but a real burden on the weekly shop of a family on average earnings.
Releasing the review early was helpful, but the inescapable conclusion is much more detail is needed from P&R to justify why a regressive GST really is the best option for Guernsey.