Population increase won't help - origins of island's financial difficulties lie in Zero-10 strategy

In common with many serving in the present Assembly, the IoD seem to be focussed on the consequences of some poor economic decisions and not the causes. We are of the view that until the cause of our problems is addressed, and while efforts continue to be aimed solely at dealing with just the fall-out from those decisions, the island is unlikely to be able to deal successfully with our present difficulties.

During the recent population debate we commented that trying to resolve the demographic 'riddle' by increasing population would be a mistake. We offered the view that this was comparable with those on a sinking ship inviting yet more passengers on board, to make bailing that bit easier.

While any population increase might have short-term benefits, all that would be achieved in the longer term would be to make the underlying problem more difficult to deal with. Any new arrivals will simply make the demographic issue that much worse, while only delaying its onset by perhaps 15 years.

The answer of course is, if your 'ship' is leaking then fix the 'leak'. In our case, the 'leak' is the loss of corporate revenue occasioned by the decision to adopt the zero-10 tax strategy.

Commentators at that time suggested that this change to our tax regime could cost the island's exchequer something around £100m. per annum. To put this sum into some sort of perspective, this approximated to 30% of the revenue income of the States. If that estimation is anything like accurate it means the island has foregone many millions in revenue income since zero-10 was introduced.

We suggest anyone looking for the cause of the island's financial difficulties need look no further for its origin and we suggest its solution.

We would have been much more impressed by the utterings of the Institute if it had recognised that much of Guernsey's present financial problems could be alleviated if everybody, especially the corporate sector, paid their fair share of tax.

We are not convinced by the argument that if we tax banks, they will leave. We would ask, where to? As the decisions taken at the 2013 G8 meeting of world leaders in Donegal effectively closed the door on 'tax havens' on a global scale, where would they go?

The Press report of the IOD conference draws comparison with our sister island of Jersey. We found the recently released out-turn for 2014 for Jersey Finance revealed some interesting information. Total net profit for their finance sector was reported as £1,470m., an increase of £290m. (25%) compared with 2013.

At the same time Jersey's government is trying to strip out a further £145m. in annual expenditure from its budget because of a shortfall in revenue income.

What these figures demonstrate more clearly than any words is that if there was ever a justification of the zero-10 tax regime, that day is long past. We are in no doubt that a similar situation would also apply in Guernsey and draw the same conclusion from that.

The Institute claims there is now a slow down in Guernsey's construction sector. This is nothing new; the construction sector is all about managing peaks and troughs in demand – it was ever thus. We respectfully suggest the local construction sector should always try to remember it exists to serve the needs of this community, not the other way around.

We were also very disappointed, but again not surprised, by the fact that the Institute was silent on where all these new arrivals would live, given we cannot even adequately house those already here.

We have not forgotten that our government has thoughtfully removed the TRP protection from what used to be termed the local housing market under the provisions of their new population management regime. A large increase in new arrivals seeking somewhere to live on the island, as suggested by the IOD, is only going to make the task of local residents trying to find affordable housing even more difficult.

This situation is being made even worse by the fact that many of those moving to the island will be in receipt of assistance with their re-settlement costs, rents or mortgages, as part of their recruitment packages. All of these benefits are presently denied local home-seekers.

As deliberately increasing the island's population is also widely reported to be the aim of many deputies presently serving in our own Assembly, we ask, where else in the world does any government deliberately discriminate against its own people?

GLORIA DUDLEY OWEN and GRAHAM GUILLE.