Seek ways to raise tax from where the money is

So perhaps States members might consider housing, community services, education, health and generally exactly what kind of community we want to be first – and make some appropriate decisions – rather than putting everything off.

The people of Guernsey are being encouraged to consider personal taxation as the principal source of funding, which is the final twist in a scenario that has been changing for about 50 years. In the last half of the 20th century Guernsey’s capital and community needs were funded by corporate tax. Every company and business simply paid 20% of its profits to the States and that proved to be more than enough to provide.

Now, following initiatives from the Isle of Man and the ‘finance sector’ we have a considerable number of companies based in Guernsey, saving and amassing vast amounts of money by avoiding taxation for one reason or another, and in one jurisdiction or another. They make almost no contribution to our island except for employing a few well-paid administrators. Can we be missing a trick?

Internationally the world is saying ‘enough’ to zero tax and beginning to attempt to oblige the larger international corporates to pay a minimum level of taxation. However it could be some time before the process spreads to every company and particularly every company in Guernsey. Surely we can help by starting the process here?

So we are being told that personal taxation is the best way because older islanders are not working and thus not paying tax and they are demanding pensions and health services and there will be an £85m. shortfall. But do Guernsey folk stop paying tax when they retire these days? I think not. Many continue working well into their 70s and 80s. They pay tax on that and on their savings investment income, which can be considerable. Additionally local pensioners often spend substantial amounts of their income and savings on health, home improvement and holidays, plus supporting their families, much of which finds its way back to the tax office.

It is suggested that the only way forward is to introduce a sales tax because everybody then pays equally – unfortunately not everybody earns equally.

For the well paid and wealthy, 10% or even 15% on daily running costs will be acceptable, but for the low-paid locals and imported workers, often paying no income tax and very high rent, 15% on living costs will be a disaster.

The inevitable result will be an increase of 15% or more in wages for these people, being passed on in higher charges or fees and the spiral begins.

‘Our Island, Our Future’ should be seeking ways to raise taxation from where the money is, and where contribution remains to be paid, and not from the already over-charged poor working and middle-class islanders.

ROY BISSON

St Martin’s