Population – the missing tax option?
ONE of the most common beliefs witnessed across the response to Guernsey’s tax review is that the States has not done enough to consider alternative plans of raising revenue other than the ‘binary choice’ of a goods and services tax, or an extra 3% on income tax.
It’s an issue that will continue to dog the review unless the politicians involved can somehow address it. They have repeatedly said that considering issues such as corporate tax, road tax, paid parking, economic stimulation, public service cuts, and many more, can all raise or save revenue – but individually, and together, nowhere near enough to cover an £85m. forecast annual shortfall.
Meanwhile, in Jersey, a senior politician there takes a view on Guernsey’s taxation dilemma while considering his own island’s impending demographic timebomb, and comes to the perhaps inevitable conclusion – Guernsey’s got it wrong.
Deputy Rowland Huelin has responsibility for that island’s population portfolio and this week steered – not without criticism, admittedly – a ‘Common Population Policy’ through its States.
Jersey faces its own demographic timebomb. Its current dependency ratio is 58% and could rise to 81% by 2065 if the island pursues a net-zero migration policy. But the deputy’s solution is not to look to raise taxes – ‘that is not within the culture of Jersey’ – but to improve productivity, readying islanders to work later into life and to be prepared to switch careers multiple times.
Jersey’s population policy seems to be just developing, after a decade where it grew by more than 1,000 people a year, and population targets set by the government were routinely overtaken. Now the island seeks to ‘progressively reduce the need for net inward migration’.
Guernsey’s own population management review is under way, but focused on a short-term fix for woes caused by Brexit and Covid, and, longer-term, developing policy as an ‘enabler’ to meet future demographic challenges.
As Jersey is discovering, population, and a policy around it, is a multi-faceted issue. Arguably, it’s also the single biggest thing which could influence the Guernsey tax review debate away from its binary choice – but it’s not even on the table.