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Case made for alternative course of action on tax

Case made for alternative course of action on tax

Thursday 26 January 2023

Case made for alternative course of action on tax

Thursday 26 January 2023

An alternative tax and reform package offers a clear course of action, its proposer has told the States.

Deputy Heidi Soulsby is leading the latest challenge to Policy & Resources tax reforms. Among its propositions it includes cutting budgets and introducing a corporate levy immediately and would spark reviews what government does and the corporate tax regime.

The package would put off any decision on GST until all those changes and work has been done.

"This amendment represents a credible, comprehensive but most importantly a fairer alternative to that put forward in the policy letter," said Deputy Soulsby, opening debate on her proposal.

"It takes account of the fact that the tax burden on households has grown in comparison to corporates since zero-10, that families who until recently could make ends meet are struggling to put food on the table, heat their homes and make enough money to live independent lives as increases in wages have not kept up with price increases."

The public believe that government could do more before introducing a new tax that will be easy to increase in years to come with any mitigating effects eroded over time, she said.

The amendment was a properly costed, staged solution, along with evidence based solutions to be made at the right time rather than an all or nothing option, she said.

She cast doubt on whether P&R's plans could be delivered in the timeframes it suggested.


Pictured: P&R president Deputy Peter Ferbrache

The alternative approach acknowledged the need to raise more revenues, agreed to social security changes and offers alternatives to GST at 5% that are easier and faster to deliver than a new tax, she said.

"It provides time to properly assess our position and whether there needs to be a more radical approach rather than just bolting on a new tax and increasing existing taxes to fill a hole."

The public believed that the government could do more to reduce spending, she said.

P&R had not won the hearts and minds of public, she said, saying that its presentation last week did not even attract enough to play a game of football other than a five-a-side.

GST was a means of raising revenue quickly, but impacted every person and business and there was a need to take the public with them, she said.

As P&R worked on its plans, funding was given to some committees without challenge and support for capital projects when people were told there was no money.

"These mixed messages lead to a lack of trust," said Deputy Soulsby.

"The Policy & Resources Committee say there is no get out of jail free card. No, this is not a game, but I do believe this policy letter should not pass or collect £64m. in GST."

There was a need to look at what the States spends on capital.

Deputy Soulsby argued there was no science behind P&R's plans to spend a minimum of 2.5% of GDP per annum over a four year period on States building and IT projects.

Those behind the alternative approach have proposed this was instead 1.5% - a figure the P&R committee wanted last term.

It still meant spending £57m. a year - something the States had not achieved since the runway was developed.

Government did not have the capacity to deliver the capital programme, she added.

The amendment left changes to benefits on the table with some tweaks.

Among other revenue raising measures, it proposed looking at a cruise ship levy which has been opposed by some in the hospitality sector.

Deputy Souslby said it was not a concept unique to Guernsey with concerns about carbon emissions and would amount to £3 or £4 a head, having "less impact on hospitality than GST".

The amendment also proposes closing the public sector pension scheme to new entrants. 

Debate continues today.

The States has already rejected a bid to spend up to £750,000 to produce a report with three options for the size of government and outlaw a GST until 2040 that was led by Deputy Carl Meerveld.


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Deputies urge P&R to drop GST plans

Thousands say 'no to GST'

"Unacceptable" and "damaging" service cuts if States reject GST

Alternative tax package promises greater States savings

Social security changes help poorer families and 'middle Guernsey'

Tax plan includes 5% GST - but P&R says most families will be better off

Why States leaders STILL think GST and tax reform is needed

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