Guernsey Press

Mitigated GST is the only sensible way forward

IN AN article on 11 September, after quoting figures illustrating an increase in ‘senior employees’ of the States, Phil Duquemin adds, ‘I do not need to explain what is wrong with the above’. I disagree. Without details of what these people are doing and why the numbers have increased the public have no way of knowing if this is justified. The same applies to the general increase in staff numbers. This is followed by a comparison between private and States employees which I find rather offensive. Let me rephrase it. Private company employees provide services to members of the public who pay individually. States employees provide services to members of the public who pay collectively (in the form of tax).


Moving on to health care costs. It seems rather unlikely that the States would be paying more for treatments than private patients or insurers such as BUPA.

It is regularly reported, and acknowledged by the UK government, that billions of pounds worth of benefits go unclaimed. We might therefore find that even if a review of our system enables us to ‘weed out bogus claimants’, it won’t result in savings.

Much has been made of the sustainability (or otherwise) of the defined benefit pension paid to States employees with demands to replace it with a defined contribution one. Clearly the States could pay less into a DC scheme than at present but it isn’t quite that simple. The liabilities under the DB scheme will continue until the last beneficiary dies, which won’t happen for decades. We also have to remember that the management of a private fund has to allow for the possibility that the company behind it could cease trading thus halting the flow of new monies. The States, on the other hand, will, it can be assumed, continue indefinitely. This means that the fund can be managed to maximise long-term returns without having to worry too much about short-term fluctuations. What is more, whereas a properly worded DC contract will require the employer to carry on paying their percentage even if the fund is doing very well, if a DB fund develops a large surplus the employer can contribute less while the surplus reduces. Finally in this connection, if a pensioner is unable to make ends meet, it is the States via the benefit system that picks up the tab.

What about the ‘many other savings’ that could be made? I have no doubt that there are many opportunities for the States to make savings without cutting services/benefits or increasing/adding new charges. However anyone chasing ‘big wins’ would probably find it more productive to invest in Euromillions rollover tickets.

So where do we go next? Consider the following: a £1.50 bus fare equates to 5% GST on £30 worth of expenditure, road tax at £200 or £400 GST on £4,000 or £8,000 of expenditure and paid parking at £5 per day (£25 per week) for 45 weeks of the year GST on £22,500’s worth. This should make it clear how, without the mitigations, some of the alternative suggestions that are being talked about will really hammer the less well off. I therefore remain of the opinion I formed a couple of years ago at the GST roadshow that mitigated GST is the only sensible way forward.

Lawrence Harding