P&R will table tax plan – lack of action prompts concern

Tuesday 24 January 2023

The strength of anti-GST sentiment has not persuaded the island’s senior political committee to abandon or modify its flagship tax and social security package, the President of Policy & Resources has confirmed.

Deputy Peter Ferbrache said he was unsurprised of the turnout for a protest rally against the introduction of GST last weekend: “Clearly it was a lot of people, and I fully accept there are a lot of people who have concerns about the proposals being put forward.

“I imagine there’s just as many people who didn’t attend who are of the same ilk and same view of the people who were there (Sunday) afternoon.”

But he has since confirmed that the Committee currently has no plans to withdraw or alter the package that will go before the States Assembly on Wednesday. 

Pictured: The States are gearing up for what has been billed by many as the most important debate of this political term. 

Deputy Ferbrache also fears the prospect of the States failing to decide by the end of the week how to fund public services and address the fiscal black hole going forward.

He told Express: “That’s what concerns me. I’m not saying that for sure because one thing I’ve learnt in life let alone as a politician is that you think so and so’s going to do whatever he or she may do, and on the day that changes. So, I don’t think anything is certain, but I think that’s at least a possibility”. 

Express understands that currently none of the options for addressing the fiscal deficit – GST+, Fairer Alternative, territorial Corporate Income Tax, or the Sursis Motive - have sufficient support from States members to be adopted this week. 

In the event nothing material is agreed, social security contribution increases – which were agreed by the States in October 2021 – will kick in and should raise over £30m per year for the public insurance fund once implemented.

But Deputy Ferbrache is concerned of the effect on Guernsey’s international reputation and did not discount the possibility of emergency action being taken by P&R in that eventuality. 

“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 said.

“It has been a matter, and will continue to be a matter of consideration for Policy & Resources, and it may well be, I’m not saying for certain because we have to work out the mechanics of it and the significance of it, that we will be coming to the States in a few months’ time saying - we’ve got to do this as an additional budget or an emergency budget. 

Pictured: Deputy Ferbrache will attempt to lead a package of tax and social security reforms through the States this week. 

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. 

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