Revisit tax base to pay for borrowing
WELL, we have well and truly put a massive financial millstone around our necks, haven’t we? However, I can see the logic of many aspects of the borrowing, like not cashing in your investments when they are probably at an all-time low and likely to recover, whilst we can borrow money at very low market rates. Over recent years, some of our States members have pushed for higher and higher minimum wages; in some age groups well above what is paid in the UK. That has come home to severely bite the States in the rear as they are now having to meet part or in some cases all of the payroll costs to those who have been put on minimum wage levels whilst they are not working. Anyway, what’s done is done and we have to look at sensible ways of recouping that money over probably the next 10 years or even more.
Let us look around: our sister island of Jersey has spent over £40m. on a new hospital without a spade being dug in the ground. Add to that a £14.5m. ‘Nightingale’ hospital that hasn’t seen a patient yet. Add in the destruction of their hospitality industry, just like ours, and you must think they are not in a good place. So, let us also review the Isle of Man: they lost their June TT motorcycle races, which fill every hotel, guest house, campsite and even private houses, just like our powerboat week used to do for us. No money from the ferries, pubs, restaurants, etc. either. Once again we must conclude that they also are in a bad place.
One thing that unites all three jurisdictions is zero/10 business taxation. Would this not be a good time for all three to agree to scrap zero/10 and bring in five/15, for example? As a non-limited liability business, I cannot see the logic of firms being able to trade without paying tax annually. I pay my 20%, why don’t they? So that would bring in more than a few shillings, possibly £30m. per annum? That alone would repay the debt within 20 years.
But that is not enough, so what other areas can be looked at? Well, I don’t know how much it would raise, but I wouldn’t be rioting in the streets about, say, a two pence in the pound income tax increase on the basic rate, rising to say 25p in the pound for higher earners. Perhaps raise the cap that multimillionaires pay as well – I think the maximum we take off the top earners is £230,000, an absolute pittance if you are earning a few million a year. And before people start saying, ‘The rich will leave’, perhaps some might, but they don’t pay capital gains tax here, nor death duties and they have the benefit of living in a nice environment with a very low crime rate.
So far so good, but what about widening the tax take even further? If we legalised the growing and resale of recreational cannabis, we could have a licence for growing it, a licence for selling it and of course a tax on the consumption of it. Now, I have never smoked cannabis and it holds no appeal whatsoever for me, but people are using it and we are locking people up for using it, so put the legality into it so there is no reason for people to try and smuggle it in, and we then don’t have to pay to bang outsiders up for years in our prison at, what is it, £800 a week or more? It must be made clear that Guernsey will still have a very firm stance on any other drugs.
‘What about GST,' some may ask? This is a terrible tax for lazy governments; it will hit the poor, be a bureaucratic nightmare for many businesses and will of course mean expanding the civil service, so no, we must object to any form of GST.
TREVOR HOCKEY
Trev’s Motorcycles.