Threefold solution to address tax shortfall

I am delighted by the support I have received from some of those who live in open market accommodation who would like to contribute through an increase in their personal tax burden to contribute to fixing the deficit. It is important to remain engaged in open discussion on how best to move forward and that we all keep an open mind.

The situation as I see it boils down to how we can get a fair contribution from everyone, without driving the wealthy away or over-burdening those who cannot afford to increase their contributions. My position is unashamedly pro-business and anti-bureaucracy, but also pro-social welfare and for providing support for the poorest and most vulnerable in society. I am attempting the impossible in trying to put forward a compromise that might be acceptable to a majority.

The different perspectives highlighted by this publication’s readers’ letters over the last few weeks show how difficult it is to drive change through a single policy. I instead propose a threefold solution. The first third of what is needed would come from the highest earners, through a combination of raising the tax cap to £500,000 frozen for 10 years and a 5p increase in tax on a new top band.

I believe that this is unlikely to reduce Guernsey’s tax competitiveness as other countries are facing similar issues and may well have to follow suit in the near future.

Another third comes from increasing property taxes. This will need to be delicately considered, but in an ideal world, the burden will be weighted towards those in higher-value properties who have greater wealth, though I take on board the issue of wealthy but cash poor retirees.

The final third should come from an independent review of government expenditure to identify where cost savings can be made, such as through reducing inefficiencies in departments and re-evaluating the pension benefits for new government employees.

Policy reforms always have different pros and cons for different individuals.

Like many countries in the world, Guernsey has an ageing population and must balance the needs of an asset-rich but cash-poor older generation with the needs of an asset-poor younger generation.

By addressing this issue through a number of strands, it is less likely that those who cannot afford to pay will be swept up in a catch-all solution. At the same time, we must find a way to attract and retain younger families and wealth producers, and we cannot hit our small businesses with GST when they are just recovering from the effects of Covid.

The wider benefits of living in Guernsey are as clear as the night sky in Sark to those of us who call it home.

By finding and supporting a compromise that works and provides a secure future economically for the country, we will demonstrate to the wider world our community of spirit which is increasingly rare beyond our shores.

In attempting to achieve that I wish P&R the very best.

GUY HANDS

Founder of Terra Firma Capital Partners