Additional taxation is not the answer to fix excessive spending

As long ago as the 1960s I can remember my accountant father maintaining that the finance industry, then very much in its infancy, was a useful source of extra earnings, but we should never allow ourselves to become dependant on it. Well at that time nobody foresaw the collapse of horticulture or tourism.

In the case of tomatoes in particular, the end came suddenly, and many people had a terrible time, especially if they’d not long invested in new glass.

Since then we have had a few other contributors to our export economy, but the high wages and benefits paid by finance have made it difficult to start or sustain alternative export businesses of any size.

At one time we had a high level of skills in electronics on island, as well as a certain amount of infrastructure, but this withered on the vine. Changes in US tax law were probably the last straw for US owners.

I believe that a few people were able to go into start-ups in similar technology, but it never became what it might have been given a different financial environment.

In his article, Andy ended by putting forward what I take to be an idea of investing in equipment to harness wind, wave power and tidal flows, and undersea cables to transmit the resulting electricity to the mainland and/or France. If we are expected to take this seriously, then what is needed are proper business plans with fully costed (and hard-nosed) profit projections and cash flow forecasts.

Salt water is pretty corrosive stuff, and this would have to be taken into account in estimating the life of the equipment. And it’s difficult to see that there would be too many buyers for the output, who one assumes would therefore be able to dictate the price if they wanted it at all. So the concept definitely needs to be proved. But all ideas for new export industry have got to be welcome since there don’t seem to be many around at the moment, and we really need something.

And I mean industry and not just building houses for possible tax exiles who could up and leave again at a moment’s notice, as suggested by Lord Digby Jones. This is not diversification anyway, and would we really permanently concrete over more of our island for such a possibly short-term solution? And if we did, then most other places in the world where land is in short supply have had to realise that you’ve got no alternative than to grasp the nettle of high rise.

Really and truly, Guernsey is now in a rather bad state, supporting an ageing population (myself included) without enough homes for younger people, and with public sector spending – especially on welfare – at far too great a level compared to our earnings to pay for it. And as we know, the population is going to continue to age, so things are only going to get worse.

Additional taxation is certainly not the answer to try to fill what has become a bottomless pit of public spending ‘requirements’. Of course these are not really requirements at all. When you have no alternative to tightening your belt, then you’ve just got to tighten it.

So much has already been said in previous years about the need to drastically reduce public spending. Effective action and not just words is long overdue. It’s not at all an easy task for a democracy though, as it will be extremely painful, and certainly attacked and resisted by the left. But it must be better to tackle it now while we still have some room to manoeuvre, rather than waiting until we are completely destitute. Our future depends on sorting this out. It’s a very difficult and major challenge, but it absolutely needs to get started now, and not be left until tomorrow.

Bob Perkins, BA, FCA (retired)

Les Corneilles

Rue de la Ronde Cheminee

Castel