Time for a full economic review

THE problem for politicians is that they tend to think like, well, politicians – dealing with the art of the possible, driven by events and always almost invariably responding in the short term. It’s why Guernsey has tried to adopt medium-term planning to look ahead and break electoral cycles.

The current debate on tax rises and GST fits firmly into the purely expedient camp. Not that maintaining a balanced budget isn’t a strategic priority, but because of the manner in which the community has been bounced into such a decision.

Government revenues have been under pressure since the double-whammy of zero-10 and the global financial crisis of 2008. Despite that, the public sector has been allowed to grow to the point where is has a more significant impact on gross domestic product, according to States 2018 estimates, than the entire retail and wholesale sector.

To some extent, this is an old argument because Guernsey’s politicians show little interest in balancing affordability with income. More worrying, however, is the absence of discussion on the underlying cause of insufficient tax revenues – the declining working age population and a restrictive regime ‘managing’ that.

Perhaps worse, as highlighted by professional services firms, so-called agile working means employees do not need to be based in Guernsey to work here, again with implications for tax-take.

At the same time, the unedifying debate on the future of education is more about buildings and models than matching the skills of the workforce of the future to the needs of employers generally and the island specifically.

Education Sport and Culture, clearly, does not want to go there. To do so would mean putting a spotlight on current performance and standards, which past members of the committee say is disappointingly poor.

All of which is compelling evidence that Policy & Resources’ under-fire review of taxation is too narrow in scope and simply designed to get it off a financial hook of previous Assemblies’ making.

P&R is going ahead with its tax review, but the need for a wider economic overview becomes ever more pressing.

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