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The long awaited Tax Review debate gets underway tomorrow, with deputies continuing to urge P&R to think again and to consider withdrawing their proposals.
The Policy and Resources Committee wants to change the way income tax and social security are collected, and bring in a 5% goods and services tax.
There has been widespread public opposition, including a rally attended by an estimated two and a half thousand people on Sunday.
P&R President, Deputy Peter Ferbrache has said he won't be backing down and his proposals will be tabled for debate tomorrow as planned.
Deputy Ferbrache is concerned of the effect on Guernsey’s international reputation if a decision isn't made on how to deal with the island's financial deficit.
“We’ll be in a state of flux because we’re not going to run out of money on 1 February or March 1 – nobody’s suggesting that for a second – but we’re going to be in a position where other jurisdictions are going to say ‘Guernsey can’t make difficult decisions’,” he told Express.
Pictured: Deputy Ferbrache told Express he is not backing down. Read that article in full HERE.
Deputy Ferbrache added that he did not attend or witness Sunday’s demonstration and could not speak on behalf of the other members of the Committee.
“Not out of disdain for the people who hold those views because I respect the views members of the public hold on that particular topic… I thought it was a matter for those organising the march,” he said.
Deputy Ferbrache also confirmed that the Committee intends to support just two of the nine amendments laid alongside its tax proposals.
These include an attempt to let the States Assembly decide to subsequently increase the rate of a consumption tax from 5% if one is adopted, and to increase the threshold where cost support payments would be available from a gross income of £28,000 to £33,000 and introduce a 30% supplement for pensioner households.
A further amendment has been lodged by Deputy Aidan Matthews who wants to bring in a "fairer" property tax, which he says will help alleviate the financial deficit.
"My amendment (#7) looks to use property tax as an alternative (to GST) would be far more equitable and promotes economic growth.
"We are facing a pivotal moment in Guernsey’s history. Over the years ahead, the number of working-age people earning a wage is set to decrease, while the number of retired people will increase. The demographic challenge of an aging population is something many countries are facing up to. One reason it affects Guernsey more is that other countries have higher immigration levels, but we are very built up already and it's a struggle to find places to build more houses.
Pictured: Property tax is one area which could be amended during the Tax Review debate this week.
"I am proposing a fair system of property tax, which would be an increase overall but those with more expensive houses would shoulder more. This way, over the years ahead, as the working population decreases, some of the tax burden can shift from earnings to property. This includes charging a premium rate for second homes and unoccupied homes. A premium rate would also apply to local market homes in foreign ownership, which can drain housing equity from the local economy by exporting gains and rental yield to other locations. Greater tax relief for mortgage interest can help offset the cost for those with hefty payments. It’s also only fair the pensioners and households with low pay can defer their property taxes if it’s too much to pay.
"If the States choose GST this time, we could fundamentally alter Guernsey society for the worse. It will become a place where the only people that can afford to live here are high earners, and those who were lucky enough to buy property when it was more affordable. With a fair property tax instead, much of this could be avoided and we could get on with important jobs like building schools that our children deserve, and providing the health and social care our senior citizens need.
"Of course there is unnecessary waste that should be cut, but for the future we need a fair and more progressive tax system."
Deputy Matthews said he thought that more than two and a half thousand people were at Sunday's protest, while Deputy Lester Queripel was more conservative in his estimate.
“I’ve preformed in front of 2,000 people on several occasions as a musician (twice at Beau Sejour and 6 times at Vale Castle)," he explained, "and due to my having that experience, looking out from the stage in Market Sq I’d say, at most, there were 2 and a half there."
Pictured: The anti-GST rally on Sunday attracted thousands of people.
Deputy Queripel is one urging P&R to back down and to look again at how to solve the financial deficit.
"I can only hope the public opposition will persuade P and R to change their minds and lay their own Sursis Motive, directing that further work be undertaken to explore all of the alternative options available to us.”
Deputy Matthews acknowledged it is unlikely that P&R will back down now, so the debate will go ahead tomorrow as planned.
"I don’t think the protest will change the minds of P&R as they seem determined to drive through with GST against the unpopularity.
"The thinking seems to be very short term, almost panic about the possibility of an impending revenue deficit. Strategic and economic thinking about what kind of island we want to become has been almost entirely absent from this review. I hope that the broader membership of the States will see that there are more effective and fair ways to balance the books that do not have to be so economically destructive."
WATCH: Highlights from the GST rally
Deputies urge P&R to drop GST plans
"Unacceptable" and "damaging" service cuts if States reject GST
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