The “dance” back to new taxation

Thursday 15 June 2023

Could Policy & Resources’ reworked Government Work Plan set the scene for future tax raising debates? It’s certainly possible, according to Deputy Peter Roffey.

“I think the elephant in the room here is that the States have really got themselves in a catch-22 position,” he said.

“The amount that they deem essential to actually do doesn't marry up with the amount of revenues they're willing to raise. And that's a recipe for disaster unless we can square that circle.”

He spoke to Express after the publication of P&R’s GWP mid-term reset, which will be presented to the Assembly as a Green Paper for debate next month. Deputies will be asked to endorse the cost of current committee workstreams – a cost that is £4million more than originally forecast in the first iteration of the GWP and a cost the government in its current state can’t afford.

Pictured: Deputy Roffey.

“I suspect that this is just the only but the dance to lead us back to saying ‘let's have another go at determining our future tax strategy’ because in the absence of changing our tax system, we're simply not going to have the public revenues to do what a clear majority of state members regard as absolutely essential," said Deputy Roffey.

He said it doesn’t surprise him that this new version of the GWP costs more “because, of course, the original GWP was laid down a couple of years ago”.

“What we haven't yet seen is the result of the cost reduction exercise under Deputy [Dave] Mahoney, which is currently doing the rounds,” he said, referring to the sub-committee set up under P&R that is currently looking to try and make £10-15million of government savings in the next five years.

However, even if Deputy Mahoney is successful in finding millions in savings, Deputy Roffey thinks it won’t be the silver bullet the States needs.

“That's just not going to balance the books going forward. So, I think it's inevitable that before too long we're going to be back in the chamber talking about... are [the States] willing to cut right back to the bone on public spending? The State's answer will be no.

“And then in September... I suspect that by then, P&R will be saying ‘well look, you weren't willing to make the sort of slash and burn moves that were needed to get public spending down and therefore, you've got no choice but to find a way of raising extra revenues’, whether that is the sort of GST route that P&R favoured last time around or whether it's another way of doing it.”

P&R have re-ordered the next three major government debates, with the GWP mid-term reset arriving next month, followed by capital projects and funding for them in September.

Deputy Heidi Soulsby also spoke to Express, suggesting that the GWP re-set is more of a “reclassification” than anything else.

“The States already agreed in last year’s debate that nothing new would be added and the focus would be on category 1 actions. However, the impression given was that a swathe of work would be cut out. That hasn’t happened, but I am not surprised, as it is incredibly difficult to decide what pieces of work should be stopped and effectively write off resources already spent on them.

“This is clearly seen by the fact that P&R are only seeking to rescind five extant resolutions out of over 380.”

Pictured: Deputy Soulsby.

Deputy Soulsby said she is pleased that the importance of commissioning is still recognised, but raised concerns about the proposed cuts to the Guernsey Sports Commission.

"The funding of the [GSC}, of which I am a Trustee, seems to go completely counter to [the importance of commissioning]. It is also likely to see a reduction of provision in secondary schools, unless [the Committee for Education, Sport and Culture] decides to fund it directly, which is likely to be far less cost effective.”

When the States first approved the Active 8 plan for sport, it earmarked £250,000 for support, but in the re-set GWP that funding is set to drop to £84,000.

Deputy Soulsby said she is also struggling to understand why the re-set has been presented as a Green Paper.

“As P&R say in their media release, it is for the Assembly to decide if and how it funds the plan or accept that some established workstreams can’t be progressed, but we have been put in a position of not being able to make it our plan,” she said.

“Together with not seeking a way forward after the tax review and moving the capital portfolio debate to September, it all feels like we are in a state of suspended animation when what we need is to make decisions now.”