Is that any way to treat our elders?
WHAT has Guernsey’s elderly population done to upset the States, and in particular the Policy and Resources Committee? We seem to be seeing a determined push, led by that committee, to wilfully shift many of the financial burdens of funding public services from the young onto the old.
The way that those behind this campaign of financial elder abuse seek to justify it is by painting a ludicrously rosy view of the lives of older islanders. We are asked to believe that most of them have bought their homes at a time when they cost tuppence, made significant private pension provision or have lots of savings, and are spending their golden years on a series of exotic cruises.
Of course, there are quite a few like that, but it is very far from typical. For most older islanders the choice is more between heating or eating rather than between P&O or Olsen lines.
Think back a few decades before the finance industry drove up average earnings. Most Guernsey people worked in tomatoes, tourism or some such employment and the wage packet of a normal worker was pretty low. Even today there remains a real split between white collar and blue collar wages, but it used to be far worse. So the majority of our current pensioners didn’t really get a realistic chance to make much provision for their old age above and beyond the state pension.
Don’t take my word for it. Look at the incomes of single pensioners in the newly released survey of Guernsey’s household incomes. The average is between £17,000 and £18,000. Not the sort of income where they are likely to receive supplementary benefit, but hardly a fortune.
So how do we help them to survive on those modest incomes? By freezing their income tax allowances for a fourth year in a row and planning to do so for the next two or three years as well. Are we all in this together? Not at all. Those of us under 65 have seen our tax allowances increased by more than 10% in just two years. All apparently because the elderly have had it too good for too long.
Sadly this campaign to rob Enid to pay Amelie isn’t going to stop at tax allowances. While I am not privy to any of the details there have been rumours for many months that in future the various States’ health insurance schemes might no longer be paid for through social security contributions but through a sort of supplementary, ring-fenced, income tax instead.
In some ways this makes perfect sense. After all it means people will pay on all of their income rather than just their earned income. That in turn will probably increase the contributions of those most able to pay because they are more likely to have unearned income. Alas, so do those who have stopped working and now only have unearned income such as pensions to live on.
Incidentally it will also mean that our effective income tax rate will be higher than 20%. No doubt P&R will argue that ‘income tax’ will still be at 20% and that the new income related ‘health tax’ is a very different animal. I suspect few will buy into that sophism.
More to the point, in the context of this column, is that islanders don’t have to pay any social security contributions once they are above the state pension age [except for long-term care] while their income tax liability stays with them until the grave.
So how will that impact on the typical single pensioner who is on about £18,000? Well, suddenly they are going to have to pay again through higher taxes for the very benefits they thought they had already bought through 45 years of social security contributions. It really is a double whammy that, of course, no future generation will face as they will only ever pay for these schemes through the new health tax.
For those early in their working career what they lose on the health tax swings they will gain on the lower social security contributions roundabout. Meanwhile the elderly will be expected to pay twice.
Just imagine that you are a 75-year-old on less than £20k who is just about managing. Ten years ago you got some relief by no longer having to shell out for social security. You thought you had done your bit. Then suddenly you find that you are getting a new charge piled on your fragile back. Is that fair?
Nor is it just the main health fund and specialist fund [which pays for the MSG contract] which are likely to change. Again rumours are rife that having forced people to pay long-term care insurance premiums the benefits that were promised if you needed nursing or residential care will no longer be universal. If so it will be a blatant case of mis-selling.
Hopefully the rumour mill has got it wrong. If not I can of course oppose these measures as a deputy at the appropriate time but with the current climate of apparent ‘gerontomisia’ I prefer to raise it now before it is too late.
If I hear one more time that we need an inter-generational wealth shift because today’s generation have it tougher than their parents I shall scream. Yes, in some cases that is true but not in that many and the collateral damage being done by these measures is considerable and hitting some of our most vulnerable.