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Following the recently published opinion piece authored by Deputy Gavin St Pier, the think-tank GPEG has written an open letter outlining its response to his criticism.
Below, the group outlines the evidence to back up its assertions ahead of the tax debate later this month:
"We offer a few responses to Gavin’s intemperate criticisms on GPEG’s paper on Taxation:
Apparently our paper is short of evidence. In fact every number is based from States publications. Though as Gavin is well aware, the accounting basis for States’ reporting is not normal accounting and actually lurches into the malleable.
Pictured: Deputy Gavin St Pier wrote an opinion piece for Express which was published last Friday.
In his time at the top, several million were lent to the Harbours and a similar amount repaid. The repayment was put in the accounts as surplus but the loan was not put in a cost. Everyone would agree that lending money to yourself and repaying yourself to generate a surplus is a concept from the Lewis Carroll school of accountancy. The technical issues with the States’ accounting are tough to convey to a general audience but the resulting misstatements are substantial. The States voted to get proper accounting in, a dozen years back, but we still have to work with bad figures, Why?
Apparently we are wrong to highlight the situation with the civil service pension fund – it is a massive exposure (£1.6 bn at least) and provides benefits far, far, better than those available in the private sector. The liability will have soared due to recent inflation. Gavin knows that the well out of date actuarial valuation he refers to was done on a basis that is, politely, obsolete. The issue is that cashflows to pay these civil servant pensions will be large, could easily become enormous and cannot be ignored. Does Gavin intend to continue to do nothing in this area?
We suggest Gavin chats to the current Chief Minister on the stated policy towards refilling the Core Investment Reserve. They seem at odds. A read of the Foreword to the 2023 Budget supports our argument . We agree with Gavin that it is unrealistic to ever expect any policy of refilling this “Rainy Day Reserve” to be implemented – which is why we said so.
Apparently we offer nothing to “the debate” – Gavin would clearly like us to be focussing on his debate which is “What form of tax is to be inflicted?” He dislikes recognising the fact that tax increases are only needed because of expenditure running increasingly ahead of income. The cure does not require advanced economics.
GPEG recently obtained data from the States that 86% of the households on the island receive some form of States’ benefit. (This 86% would rise if the current Spend and Tax proposals go forward.) The UK comparable number is 52%. This large difference is worthy of thought, analysis, and perhaps, action.
Does Gavin believe that cost savings and efficiencies do not exist to be achieved? Is more and more tax his preferred, and only, solution?
Gavin takes offence at our question “Would you prefer your wallet was under your control or spent as directed by Mr Ferbrache or Mr Roffey?” . If we produce another edition of the paper (which was written before the Spend and Tax proposals debate got going) we will consider adding Gavin to the list.
The GPEG-suggested steps needed to eliminate the structural deficit are obvious to anyone who has read the GPEG paper. You can easily find it on the GPEG website; GPEG LBG info@gpeg.org.gg.
GPEG January 2023”
