Tax review crisis averted – for now

HOWEVER you read treasury lead Mark Helyar’s comments on social media this week about Policy and Resources’ review of taxation, they posed profound implications for government revenue-raising.

Taken at face value, P&R had simply completed a piece of work started by the previous Assembly – which asked how best to raise up to 24% of GDP in additional tax – when it should have been pursuing how to trim the size of government.

Releasing proposals that could unleash a damaging, regressive and inflationary goods and services tax is not something to be done on a whim or because, as Deputy Helyar suggested, the committee was simply following orders.

There is no going back from GST or its impact on business, the visitor economy and the cost of the public sector as the unions demand compensatory pay rises. It can only be an act of last resort.

A few hours later, an official statement from the committee clarified a self-inflicted policy wound – their man was speaking personally, helpfully stimulating the debate, and the tax review will be presented to the States next month as planned.

The only hint of the difficulty created by the off-piste remarks was P&R rejecting Deputy Helyar’s suggestions that cuts alone can replace the need for tax rises. Our age profile means increases are inevitable, but let's not blame the elderly for that.

If islanders buy into that, it means collective responsibility has prevailed and a spirited case for tax rises and a GST will be made by a treasury lead who thinks government is bloated, costly and inefficient.

Whether we will hear more about ‘what could be, but isn’t, being done’, as Deputy Helyar’s statement put it over States economies, remains to be seen.

If we do not, that is an opportunity wasted. Public sector reforms have been a shadow of what are actually required and possible – and there is now a chance that the biggest champion of them has been silenced.

On the plus side for P&R, thanks to some creative communications, the tax review remains intact and crisis has been averted. For now.

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