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Deputies warned against opting for "comfort blanket" of delay on tax

Deputies warned against opting for

Thursday 26 January 2023

Deputies warned against opting for "comfort blanket" of delay on tax

Thursday 26 January 2023


Extra layers of government, cost and delay were all that the States would be delivering if it supported the Soulsby amendment, members have been warned.

Employment & Social Security President, Deputy Peter Roffey made the comments this morning, during an impassioned defence of the tax and benefits package he had helped draw up working with Policy & Resources.

Deputy Heidi Soulsby is leading an amendment that would put a proposed GST on the backburner while more is done to cut costs, review government and corporation tax, as well as introduce a new corporate levy.

Deputy Roffey told members that the amendment was an "expensive version of nothing".

"We have a very small government," he said. "And if anybody thinks that we are going to solve the financial issues that are being driven not just in Guernsey, but everywhere in the developed world, by changing demographics by making that government far smaller than they are chasing unicorns."

Other than in Health, the size of the public service had shrunk, he said. Another driver of increased costs were pensions, he added.

"We are going to have to put far more money into social care in order to have a civilised society with our changing demographics."

GST_protest.JPG

Pictured: Anti-GST protestors gather on the steps of the Royal Court on Wednesday.

Addressing these challenges had been left far too long, he said, and the cost pressures were probably going to accelerate. He believed a GST was unavoidable if decent public services were going to be maintained.

"We stand absolutely on the brink of savaging our public services, or plunging our community into a situation of a massive national debt, or both, and probably wrecking our credit rating along the way, making any borrowing more expensive."

He believed the proposals to set up special committees to review government and corporate tax proposed in the amendment would cause more delay.

He questioned whether it really would get down in the weeds and look at radical ideas like means-testing for States education, pensions or scrapping family allowances. If it did, the States would reject these ideas, Deputy Roffey predicted.

P&R was already mandated to consider corporate tax, he said.

"If this is about not trusting the current P&R committee to do the work, I've got the answer, simply change it."

Social security contribution proposals in the tax review package were incredibly redistributive, he said, and it was wrong to simply describe them as mitigation against the regressive nature of GST.

"They are a revolution in social policy, and making this island a fairer place. If we miss that opportunity, it will be a wicked dereliction of our responsibility towards those struggling to make ends meet in this expensive Island."

Gavin_St_Pier_and_Heidi_Soulsby_tax_alternative.jpg

Pictured: Deputy Heidi Soulsby is leading an amendment against Policy & Resources tax package, it is seconded by Deputy Gavin St Pier.

While the Soulsby amendment left these reforms in place, he struggled to see how they would be funded.

Deputy Roffey did not believe the amendment would put enough aside to deliver the capital programme and projects like affordable housing. For those opposed to GST, the Soulsby amendment was not for them, he said, because it just inextricably led towards it. The States needed the revenues being raised in the P&R proposals, he said, but he had worked to protect those Islanders of modest means.

It was a progressive package, he said.

"I believe that the proposals in the policy letter are the least bad option and I'm absolutely sure we're not going to come up with anything better through delay. Delay is just a comfort blanket."

Deputy Yvonne Burford noted the efforts of senior deputies to work up the tax package and recognised many of the challenges it seeks to address. But she said she could not support it.

She commended the work of the Tax Review steering group, saying their package was "well researched and proposes generally, and perhaps surprisingly progressive" solutions to the Bailiwick's fiscal woes.

Deputy Yvonne Burford

Pictured: Deputy Yvonne Burford.

She also thought that the mitigations represented a genuine redistribution of wealth from the wealthy to the poor and emphasised that "savings alone are not going to cut it, neither will taking away services that people want, need, and have become accustomed to".

But Deputy Burford said that the timing for introducing a new tax was wrong, criticising Policy & Resources' public engagement campaign for "using 20th century methods in 21st century world".

She labelled it an "insufficient two-way debate with those that feel GST will be the straw that breaks their backs... many on lower incomes do not know that the deductions column in their pay slips will come down".

She also feared the introduction of a consumption tax either "just before or just after the next election", adding that it would inevitably become a single-issue campaign for candidates which "does not produce balanced, effective parliaments".

"GST is in my view currently politically undeliverable."

Deputy Burford questioned if the proposed mitigations to a regressive GST on households would be able to withstand future increases to the rate of tax. She thought it would be "very unlikely that counter measures would be introduced in those instances".

While lending her support for the Deputy Soulsby 'fairer alternative' amendment, she remarked that she was "extremely disappointed that it is not more redistributive".

Nonetheless, she argued "it probably represents the only chance out of all the options on the table".

Debate continues.

READ MORE...

Case made for alternative course of action on tax

Act now on tax call from Ferbrache as States losses mount

WATCH: Highlights from the GST rally

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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