Guernsey in financial mess due to zero-10
INTERESTING to hear Treasury leader Mark Helyar on the radio on Friday April 23 and on the front page article on the financial crisis we are in. I have often in the past mentioned that Guernsey, Jersey and the Isle of Man are in a financial mess and the one common denominator is that we all have a zero-10 company tax structure. Surely, logic would dictate that they should come together and agree a revised rate, perhaps five-15 which would benefit all three jurisdictions? As a small business owner paying my 20% tax, I really do not understand why limited companies get away with this, they can put the money they should be paying the States into bank accounts and delay the day they have to pay up, it is just so wrong. Another issue is that the money we waste on off-island ‘experts’. I am hearing complaints about the IT provider Agilisys, printers not working in schools, changing States department telephone numbers leading to States-provided mobile phones not working, terrible communications when dealing with issues and it seems they want even more money out of us. When it comes to IT we must have the reputation of being an easy target as over the years so much money has been wasted and new systems did not work, was there not a big problem at the Board of Health under Peter Roffey’s leadership? The saga just goes on and on, and as we are supposed to have IT experts surely this should not be happening.
TREVOR HOCKEY
Editor’s footnote: A spokesman for the Policy & Resources Committee said:
Thank you for the opportunity to respond to your reader. There is a lot of misinformation in their letter which we are happy to correct. Firstly, your reader points to the Isle of Man, Jersey and Guernsey as though these three jurisdictions are facing financial difficulties. They’ve decided it must therefore be the result of zero-10. This is wrong and your reader really just need to look a little more at what has been happening all over the world. Many countries are facing severe financial difficulties both because of Covid-19 and separately, because of their ageing demographic which is creating challenges for them very similar to our own. In this respect, the islands are far from unique. However larger jurisdictions are more able to continue running larger net deficits, and increasing levels of debt. What makes Guernsey particularly different from other places is the extent to which it has, and has had to, broadly operated a genuinely balanced budget and while we do have borrowing, this is more than offset by our assets.
Your reader, who is a small business owner, will be paying 20% income tax like all those who work in Guernsey, but he will also be enjoying 0% corporate tax and his business is not disadvantaged compared to others in Guernsey because of zero-10. Importantly, the move to zero-10 also saw other tax changes to ensure the corporate sector continued to contribute in other ways, such as increased commercial TRP and changes to employer social security contributions. When we talk about tax it is important to look at the whole system and not one type of tax in isolation.
Where your reader is correct is that the zero-10 tax regime has fundamentally changed our tax system, and as we look at the fast-approaching financial challenges, we must consider all the options for making our public finances sustainable. However, in doing so we need to consider the importance of ensuring we have a competitive economy. Raising taxes in a way that disadvantages Guernsey-based businesses is clearly counter-productive and will leave us all worse off.
While unrelated, we would also like to take this opportunity to correct the assertions made about the States’ strategic partner for improving IT and digital services. Firstly, the States faced very significant increases in the cost of its IT future years when it had IT services ‘in-house’. The cost of the partnership with Agilisys is not on top of our in-house costs, it is instead of them, and going forward it will mean, through proper planning, that we avoid those escalating future costs.
It is also our partners Agilisys who have delivered some of the most important digital solutions used in our Covid-19 response, including our track-and-trace IT system and the online travel tracker. They have worked extremely hard for this community and we owe their staff our thanks for going above and beyond.
And while the pandemic has put a lot more on Agilisys’ plate, as it has for many others in the public sector, they’ve continued to deliver improvements in our day-to-day services and save costs. For example, printers across the States have been replaced and rationalised, resulting in a saving of more than £500k per year. Mobile phones have also been replaced and rationalised. We have reduced the number of devices by nearly 1,000, meaning a saving of more than £100k per year. There
have been some technical issues along the way, which is not unusual in large-scale replacements of equipment, and we are always very aware of the impact on service users, but in some cases this has been
more down to outdated IT infrastructure that pre-dates Agilisys. This is part of the problem schools have experienced with their IT, but work has commenced in the last few months with Agilisys to start addressing this.
Finally your reader mentions issues in Health and a critical project to replace the old and Electronic Health and Social Care Records system is nearing conclusion, with a preferred bidder expected to be announced in the next two months.