‘This halfway house is a place of misery’
Guernsey is stuck in a middle ground of high taxes but without the gold-plated benefits enjoyed in other jurisdictions, says Horace Camp.
TODAY I am going to dispel the myth that Guernsey is a low-tax jurisdiction. On the basis that if it looks like a donkey, brays like a donkey and walks like a donkey then it is a donkey, I’m going to describe a high-tax jurisdiction and let you decide if Guernsey is indeed an HTJ.
High-tax jurisdictions generally offer higher tax rates, but also provide a range of public services, such as health- care, education and infrastructure, funded by the taxes collected. The benefits of high-tax jurisdictions include:
l Better public services: With higher tax rates come better public services, such as health care, education and infrastructure, which can improve the quality of life for residents.
l More funding for government programmes: Higher tax rates allow the government to fund more programmes, including those aimed at reducing poverty and inequality.
Does the above ring any bells for you? At the last general election I don’t remember anyone campaigning for higher taxes, although there were so many manifestos, perhaps I missed Deputy Helyar’s and Deputy Ferbrache’s where they nailed their colours to the mast of higher taxes and bigger government.
I think we are to blame for not noticing we are on a Scandinavian trajectory for taxes, where we in effect have our pay directed straight to the States of Guernsey and it provides for our needs. Possibly a small amount of pocket money will be returned to cover the cost of our hobbies, after all, Smash Fishing will need a few pounds to buy fishing line and lead weights every month.
We stupidly held on to the notion that we were a low-tax jurisdiction even as the share of our money taken by government in myriad ways grew like topsy. Smoke, drink, and drive a fossil- fuelled car? Then have you noticed that these things have become more expensive?
The States of Guernsey has been very devious and we have been very slow-witted. We are told that our low income tax rate is sacrosanct. We are cushioned from the true cost of our States-delivered social services by not revealing how much we should actually be paying in insurance contributions to support it.
So new taxes are found and hidden taxes are increased. You may notice if your social security contributions go up but do you know how much the extra cost of your petrol price is down to fuel duty?
The point here is that, putting corporate taxes to one side, the only source of tax in Guernsey is the wallets and purses of the people. It may make a big difference to the States of Guernsey that some of the tax collected is from smoking or drinking rather than from TRP but to the Common Housefolk of Guernsey it’s money that comes out of the same pot.
At the moment it’s all one big mess because we are neither one thing nor the other. We do not have a government seeking to ease the tax burden, as the mandate we gave them instructed, but rather we have a government hell-bent on providing cradle-to-grave support in the manner of a socialist Utopia.
The problem is it doesn’t tax us enough to actually provide the cushioned support that other high-tax jurisdictions do, but it taxes us too much to allow us to live comfortably with the money we need to make up for the lack of gold-plated services. I wouldn’t mind being taxed more for a £30k French old age pension and I’m sure many working families would love totally free childcare from birth to graduation.
Envy drives our problems. We press our noses against the window of the Michelin-starred restaurant and suddenly lose the taste for bean jar as we see weird concoctions served on house bricks. Those of us who drink vow to never sup Blue Nun again as we see the 2001 Chateau Lafite Rothschild poured into crystal glasses.
What’s even worse those fine diners move to our fine homeland and bring their expensive tastes with them. A caviar omelette at the Ritz for breakfast may be a good start to the day, but so is a warm bowl of porridge.
So, people of Guernsey, which way do you want to go? We are well on our way to big government and high taxes but this halfway house of high taxes but lack of comprehensive cradle-to-grave hand-holding is just a place of misery, with neither the States nor the people having enough money to do all they want to do.
As Richard Digard pointed out last week, the States, already our biggest employer, is soon to pass finance as our biggest sector. Finance is shrinking, not because of a lack of business, but because of a shortage of staff. Finance is creating jobs in other jurisdictions because it cannot compete in a market where the public service ties up thousands of workers.
Wouldn’t it make sense if the public service outsourced to other jurisdictions to reduce the cost of government, allowing the finance industry to create high-paid, high-tax-paying jobs in Guernsey? Or even if the States would shrink and accept that most people are big enough and ugly enough to look after themselves and only a small minority need the safety net?
GST needs to be kicked down the lane because it is a duct-tape fix and not the solution to our problem. Following the current trajectory, where government growth vastly exceeds economic growth, there will always be a need for more taxpayer money. Eventually, there will be no more money to squeeze and the Ponzi scheme will collapse.
We need to define the problem before seeking a solution. And before we can even do that, we need to decide if we want to be a high- or low-tax jurisdiction.
In my view, a small community like ours survives on being fiscally responsible. We can’t print money like the big boys and we can’t control virtually anything that comes our way. To continue as an independent jurisdiction we need our government to be debt-free, not shouldering huge risks like the civil service pension obligation, and to stay small enough to sail through bad times without sinking.
Jacob Rees Mogg can afford a nanny but we, the people of Guernsey, cannot. If you live in Guernsey, then accept that as an adult you are responsible for yourself and your family. That means you need money in your pocket and if the States of Guernsey thinks you are not as capable as it is of spending your own money, then tell them to take a hike.