Will GST be selective?

Guernsey cannot and should not go down this road, it will hit retail outlets at a time when the high street is already in free fall and the cost of living is very high compared to the UK. Whilst low earners will be supported, middle earners and local companies will foot most of this regressive tax on top of the introduction of supporting a secondary pension scheme next year – that’s required, they tell us, as we are living longer, not the fact that our social contributions have been mismanaged for decades.

GST will lead to redundancies, putting pressure on social to pay out more, reduce the personal tax take and make the island a retirement place for the wealthy only.

Zero-10 got us into this mess but we were told, ‘we have no choice’ and it was sold to the majority by saying it will attract more businesses and spending that will fuel the economy – but we are still waiting for that to happen.

Guernsey companies that used to pay tax on their annual profits can, under Zero-10, defer it until they distribute the profits. I know many that have invested it over the years and left what’s called the ‘tax time bomb’ for another time. I have asked deputies past and present over many years how much is owed in the years since Zero-10 was introduced that would have normally been collected annually? None, not one has ever come back with the answer, and this could be tens or hundreds of millions of pounds. This couldn’t be clawed back overnight, but if company tax went back to being paid annually on profits this benefits the economy and lessens the black hole that needs filling.

Collection of GST, how much will it cost?

Jersey found out that 3% wasn’t enough after the administration and our tax office is years behind with income tax, so that doesn’t give much confidence in their administration skills if another tax comes in. GST will, as it did in Jersey, see a large falling-off in retail, meaning the income collected initially will not be what was expected and then it might be increased to do so. Similar to duty and road tax on fuel, as vehicles have become more efficient, burning less, the tax take increased to currently around 50% of the cost of a litre and they should learn from this – whatever per cent you put on today will without doubt never go down.

How big will the post office and logistics companies become to store imported goods and charge GST on internet purchases, where will the staff come from to carry it all out? Some would say imported labour – really? We can’t get them now, and where would you house them – or would this be all too much to administer, and make them exempt to GST, costing local retailers again.

Which brings me to the big question, will GST be selective? Some pay, others don’t. House purchases, legal fees, TRP, children’s clothes, soft drinks, alcohol, flight tickets. I could go on, but it’s an important question to be answered – will GST be across all purchases or selective?

Finally, what’s the answer to fund health, education and public services properly and maintain the island’s infrastructure ? Cut your cloth to suit, get rid of vanity projects we have seen too many of over the years, use the States’ property portfolio better, reduce staff in the civil service, not talk about it but make sure the services are supported. Make sure the civil service operates in a more business-like fashion and trim the fat to make it more efficient using technology. Stop subsidising Aurigny and the bus company, make them operate like a business should – profitably.

Reduce deputies to 20, cut the red tape and implementing of unnecessary laws and therefore reduce the amount of law officers, then make all companies pay tax on their profits annually and claw back any that is due since Zero-10 was introduced and make every company working out of Guernsey pay their tax here, don’t let them choose where to pay it, and un-cap the limits on the tax of wealthy people coming here to live.

This Policy & Resources Committee has a difficult job to fulfil, and I don’t envy them following on from the decades of financial mismanagement that they have to put right, but we need to listen and voice our opinions for them to get a balanced view of how the people feel before a decision is made.

These are my views and I look forward to hearing others over the coming weeks.

DAVE BEAUSIRE

Chairman/owner of Le Mont Saint Garage Ltd