Writing about GST is a curious affair. You would think that a tax is simply a number, a rate, and start date. And that reasonable people, shown the same facts, would arrive at roughly the same place.
Not so.
In litigation, both sides usually begin by agreeing which facts they share, however grudgingly, before arguing over what the facts mean. Politics rarely extends itself the same courtesy. A fact, in my experience, is welcomed in proportion to how flattering it is, or otherwise quietly shown the door.
So here’s a thought. Is there anything in this GST debate that both its champions and its critics could, in principle, shake hands on? I think there is.
Two small confessions first. I write this assuming P&R still believes its own policy letter, and still stands by its Rule 14 answers. Said here so nobody can later accuse me of moving the goalposts.
P&R says GST raises £55m. a year. But GST was never meant to arrive alone. It comes with income tax and social security changes, expressly designed to take the edge off a tax that falls hardest on those least able to pay it. Since these changes exist solely because of GST, logic dictates they be counted against it, not buried in an appendix as though an unrelated act of generosity.
To its credit, the committee has already done this sum. Kind of. It lives in Figure A7.1 of the policy letter, a table so unintelligible that almost nobody has read it, let alone understood it.
Net GST against its own mitigations, exactly as Figure A7.1 does, and the committee’s printed figure collapses from £55m. to £30m. Carry on down the same table to where P&R deducts its own running costs and the TRP freeze, and it drops again, to £26.5m.
Every digit so far is P&R’s. Not mine. Run through the committee’s own rules. Which means £26.5m. ought to be the one number a GST enthusiast and a GST sceptic can agree on. And, as more recent data has emerged, this estimate is about to be sorely tested.
The first test concerns the data used to estimate how much your household spends, and therefore how much GST you’ll be shelling out. In an earlier article I noted the £41m. estimated household take rests on a survey from 2018/19.
A Guernsey that existed before the pandemic, before the cost-of-living crisis bit hard, before seven years quietly hollowed out the average pay packet. So it will come as no surprise to learn that a newer survey, covering 2023/24, shows P&R got household spend very wrong.
When the new data appeared, P&R said it would have ‘a relatively limited impact on the total estimated revenues’. But run the model again using the government’s own newer numbers, the committee’s own inflation figures, the committee’s own rules throughout, and household GST falls by somewhere between £9m. and £15m. An overstatement of between 22% and 37%. I leave readers to judge whether that’s a ‘relatively limited impact.’
Deputy de Sausmarez went further, promising a rerun of the modelling by August. August has been and gone. The debate resumes at the end of the month. And the reworked numbers are nowhere to be seen.
I reworked the calculations myself and sent P&R my workings. Deputy de Sausmarez replied on 18 August to say she could see where ‘some of the errors had crept in’. I had, she suggested, used median household expenditure rather than mean, and left Alderney out entirely. She also asked, courteously, that I not publish my figures, ‘so as not to inadvertently cause any confusion’.
I double-checked. I had used the mean, as the survey and the policy letter require. As for Alderney, I had reconciled the taxable base to the States’ own published dataset. Which, it turns out, leaves Alderney out too. I explained this in my reply – but have heard nothing since.
While I wait, the States published its latest tourism figures. So I checked those too, using the same approach throughout. P&R says visitors will contribute £5m. in GST. But this estimate missed the obvious: roughly £35m. of visitor spend is on travel to and from the island, which the policy zero-rates. Take that out, and £5m. becomes £3.42m.
Even taking P&R’s most generous reading of the new household data, the running total now falls to just under £16m.
That is not my estimate. That is the government’s most current data, run through the government’s own rules, arriving somewhere GST supporters never seem to end up.
Now to the argument over pay. P&R say GST’s 1.9% inflationary nudge costs nothing, since nobody has to give anyone a pay rise to match it. This is true in the way it’s true that nobody has to feed the cat. Public sector pay has, in practice, tracked inflation for years, and recently the Guernsey Press has reported that States employee unions are still waiting on P&R, which promised to open 2027 pay talks in spring, then summer, and had, as of Monday, opened nothing at all. A curious time to insist pay floats free of inflation.
Include this pay cost – roughly £8.2m. – and the figure that began at £55m. now sits at around £7.7m. Include the further, foreseeable cost of uprating pensions and benefits in line with the same inflation P&R predicts, and you arrive almost at break even.
P&R disputes this, insisting the relevant funds have plenty of 'headroom' to absorb the inflationary costs caused by GST-induced inflation. If this is truly the case, why not lower contributions by the same amount and save the taxpayer the difference?
Take the more realistic household figure (a 37% drop in spend) instead of the kinder one, and the total GST return is no longer a return, it morphs into a loss.
A tax introduced to fix the public finances that, on the government’s own numbers, could lose the States roughly £6m. a year. And that’s a pretty cautious prediction. P&R still refuses to factor in bad debt, company closures, people spending less, leakage, or fraud.
I don’t offer any of this as certainty. I offer it as what happens when you take a government’s own figures and insist on adding them up honestly, all the way to the bottom of the page. Perhaps every adjustment here is wrong, and P&R will show its workings and prove it. I genuinely hope it does.
But here is the real problem, and it has nothing to do with arithmetic. Most deputies will not look at Figure A7.1 all that closely. Most will not look at the updated numbers, check them, notice that August came and went without the rerun they were promised; only a handful seem willing to challenge P&R.
They will simply take the president’s word for it. Not because the sum holds up, but because it is her word. And in this Assembly that has, so far, been worth so much more than facts and figures.
A committee that promised transparency and then quietly asked for figures not to be published, that cannot tell its own staff what they’ll earn next year, that refuses to release its workings, has done little to earn that trust.
But it will likely get it anyway.
If Guernsey ends up taxed on numbers its main proponents cannot make add up, it won’t be because nobody did the sum. It will be because not enough deputies thought the sum mattered more than the smile.
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