Could Tax Review be a ‘damp squib’?

The States meeting this week was originally scheduled to debate the revised Policy & Resources Plan, but its rebranded successor, the Government Work Plan, was debated in July instead.

The effect of this is there won’t be statements from two of the committees that we have come to expect as routine. That will save an hour, which is just as well, as we are still carrying over so much business from the summer. This includes the States’ Assembly & Constitution Committee’s ‘green paper’ on lessons from the 2020 general election; whether or not to dig granite out of Chouet Headland; and Guernsey Electricity’s report and accounts, which may garner a bit more interest and debate after the last meeting’s decision to authorise ‘interim’ changes in the tariff regime, in part at least, recognising the company’s financial position.

All that is before we get to this meeting’s scheduled items, which include a number of technocratic items – for example, to do with the International Criminal Court and sanctions.

On top of this, I am moving two motions which will lengthen the agenda. One of these, with Deputy Taylor, will force a debate on the legislation which creates a permanent statutory cap on any damages which an individual can claim in the event of death or injury from the Covid vaccine. Without our motion, because it’s been approved by five members of the Policy & Resources Committee using their emergency powers under the 1948 Reform Law, it would not normally be subject to debate. To many, such a piece of legislation is a common-sense limitation of taxpayers’ liability for future claims, while others will say that government wouldn’t need to do this if the vaccine was 100% safe. It is because of that polarisation of views in the community that we believe there must be open and transparent debate of this legislation, by all members of the island’s legislature, as will be the case in Sark and Alderney.

The second motion, with Deputy Burford, is to seek the States’ approval to give a bit more scrutiny and debate to the Guernsey Legal Aid Service’s annual report, failing which it will slip without debate onto a digital shelf to gather metaphorical dust. On the one hand, it would be very easy to say the Legal Aid Service managed to underspend its budget last year – largely because of Covid – so there is nothing to see here. On the other, after 20 years’ operation, there is a case of lifting the drains on a number of issues, such as ‘financial eligibility’ – which means, for example, that those on income support automatically receive legal aid, while those who are not, but who have the same income and assets, may not.

All of this is, of course, a side show for the main event, which is the Tax Review.

Actually, I have empathy with Deputy Helyar – and others. They have been elected to the States full of enthusiasm and ideas – particularly that the States just needs to be run more like a business. After a year, they’ve learned that government isn’t – for a whole host of reasons – the same as business, and they have found themselves, of necessity, dealing with the same policy problems faced by their predecessors but – perhaps more surprising to them – they’ve discovered they’ve got the same limited policy options too. And that’s why Deputy Helyar, elected on a manifesto of opposing a goods and services tax – and indeed any tax increases – finds himself both raising taxes and leading the charge for GST, even if he is unable to carry his party, the Guernsey Party, with him. It’s an invidious, unenviable position to be in – but an inevitable one.

The policy letter from the Policy & Resources Committee is 30 pages long. It summarises the 50-page report of the work of two of its members and others in the Tax Review Steering Group, which in turn summarises another 75 pages from a report commissioned from Deloitte. There isn’t – I suspect to no one’s great surprise – anything new in terms of articulating the public finance challenges which was not in the January 2020 policy letter which set up the review. Similarly, the solutions offered have a great deal of familiarity from the 2015 Personal Tax, Pensions and Benefits Review.

The policy letter has been laid as a ‘green paper’, which means it is unamendable by States members and is supposed to be a general policy discussion only. This form of debate will have been presented to Policy & Resources by its officers as one of the options available to them. I think taking that option is a tactical error. Avoiding – from the committee’s perspective – ‘daft’ amendments from members (like me) will, I am sure, have been a persuasive attraction, but the absence of truly substantive votes at the end of the debate means that the Assembly can have its cake and eat it – which, we are told so regularly, is not possible.

The Assembly can argue, without consequence or substance, that it wants more efficient government, while avoiding any loss of or damage to front-line services, while avoiding significant tax increases and, certainly, while avoiding the bogeyman of GST. On the other hand, if the Assembly votes for the proposition in favour of GST, it won’t look and feel like a ‘general policy’ discussion to the public – which is why States members may be reluctant to do so.

In short, despite all the rhetoric that this debate is really important, by avoiding – perhaps for the best of reasons – substantive votes, the Policy & Resources Committee has given the Assembly a free pass. In that event, the debate could be less of ‘the main event’ of this meeting, but more a ‘damp squib’.

And that risks leaving this administration 25% into its term but no further forward on one of the key actions it set for itself.