Introducing GST would be disastrous for the island

Everybody has been focusing on finding ways of raising new or increased taxes – GST and an increase in income tax among them. But, surely, the States is focusing on the wrong side of this difficult equation.

Perhaps States members should look upon this dilemma, and support measures to deal with it, by imagining that this problem is similar to their own personal finances.

You want a lovely holiday, or perhaps a new car, but you’ve looked at your personal finances and have realised that you cannot afford such items on your current income. What do you do about this?

As I see it, you have four alternatives: you forget about the holiday or the car; you look at whether you can borrow enough money to finance these purchases; you see how you can increase income to pay for them; or you decide what you can spend, and then go and look for a holiday or car to suit the sum you have calculated: not the other way around.

In other words, you decide what you can buy based upon your existing finances, not fitting your finances to what you want.

How does this apply to the States of Guernsey?

First of all, the States must examine its own finances to suit what it wants to do: not the other way around. Doubtless, the States Committee for Economic Development has already done this. But have they been hard enough in determining what money can be made available to finance the foreseen shortfall as you would be when dealing with your own personal finances? For example:

Cut foreign aid by 50% (I know, I can hear the howls of protest from here; but charity must begin at home).

Forget all about so-called vanity projects such as redeveloping the harbour or elongating the airport runway: both old chestnuts that we can no longer afford – so why spend any more money on them, or even on useless feasibility studies which only line consultants’ pockets?

Redevelop available surplus States buildings and brownfield sites to create affordable housing, then hold it for rental. This will create additional income for the States. Not much, I agree, but everything that contributes to balancing the books is surely worth looking at and investing in.

Such a policy would also have the benefit of showing that the States itself is doing something positive to solve the island’s housing crisis.

Reintroduce road tax to raise revenue. Pretty much all other European countries have it, so why shouldn’t we? This also ensures that those who drive most pay the most. If you want to increase revenue, put in car bandings, so that more expensive cars pay more.

Such an introduction will also be felt less by low-income families, who use buses or walk rather than have cars – because they cannot afford them.

Increase corporation tax – companies must bear their fair share of any tax increases as well as individuals.

I am sure that there are many other ways in which money could be saved, or income increased, without resorting in the first instance to increases in income tax or the introduction of GST. Such an exercise requires cohesion and sacrifice right across the board from every States committee: a very difficult task given the silo mentality of various committees, but not an impossible one. And if, on completion of this exercise, the States comes to the conclusion that it cannot finance existing services with its expected income, then these services have to be cut to suit projected income, not the other way around. I know that this could be classified as ‘tough love’, but so be it.

Your own personal finances would oblige you to do the same, or face personal bankruptcy – with all of its consequences.

Above all, I feel very strongly indeed that the introduction of GST, VAT, or whatever you want to call it, would be disastrous for the island. I absolutely believe that, once introduced, it would rapidly become the thin edge of a very thick wedge. It would be too easy to increase this tax just to pay for vanity projects: remember that VAT in the UK is currently 20%-plus.

If every States member who wants to spend our money was to state quite clearly how he or she was going to pay for their proposed spend, they would gain my immediate respect... and my vote.

I commend this strategy to the States of Guernsey.

MEYRICK SIMMONDS