OPINION: GST probably "dead on arrival" despite low turnout at march

Wednesday 08 June 2022

OPINION: GST probably "dead on arrival" despite low turnout at march

Wednesday 08 June 2022

Deputies proposing a goods and services tax could have been forgiven a wry smile and a sense of relief at the weekend when fewer than 50 people turned up for an anti-GST protest.

But they would be unwise to equate public apathy with acceptance. Or to imagine that most of their colleagues in the States, having seen the size of the march, will start to think it might be electorally safe to vote for GST.

It isn’t and they won’t.

The late Deputy Dave Jones used to enjoy telling the States that an idea he particularly disliked was “dead on arrival”. But in his 16 years there, I doubt the Assembly was presented with any major proposal less likely to be approved than GST is when – or rather if – the Policy & Resources Committee re-presents it to deputies later this year.

Without established parties and their guaranteed votes, it has always been challenging to get big, sweeping, contentious policy through the States.

For 30 years, they have gradually been making it harder still: removing conseillers, introducing general elections so that every seat is vulnerable every time the island goes to the polls and promoting themselves more as delegates of popular will than representatives of public interest.

The political price of leadership has never been higher. The political price of opposition has never been lower.

Pictured: It has arguably never been harder to lead the States into accepting the need for difficult and contentious decisions.

In this environment, committees need a few vital ingredients to stand any chance of getting unpopular or even divisive policy through the States.

First, they need to be speaking to an Assembly which wants to be decisive. But this Assembly is building a reputation for prevarication: think harbours, secondary pensions, and the tax debate itself, initially postponed from last summer to this summer and now deferred until Christmas. There’s as much drift as decisiveness.

Second, they need an Assembly which is at least instinctively sympathetic to the changes proposed. But this Assembly is more right wing than most of its predecessors, has a powerful populist streak and overwhelmingly sees the prospect of tax increases as failure to cut waste or grow the economy.

Third, they need to persuade the Assembly that alternative policies have been exhausted and dismissed reasonably. Of course, that is the purpose of the latest review of corporate taxation now underway. But the main advocates of taxing companies more say they have little faith in the review.

And the review is doing nothing for an even larger group of deputies who want more work done looking at an assortment of numerous smaller tax increases – for example, on properties, income and pollution – before they are prepared even to consider GST.

Pictured: Deputy Mark Helyar, the Policy & Resources Committee's Treasury Lead, has predictably faced significant opposition to proposals for GST.

Fourth, they need to take their policy to the Assembly with conviction and confidence. The President of the Policy & Resources Committee, Deputy Peter Ferbrache, could justifiably claim that he is, but in any debate about public finances the key figure is the Treasury Lead, Deputy Mark Helyar.

As we have written before, Deputy Helyar is ostensibly a tax cutter but is now the proposer of the largest personal tax increases in living memory, and increasingly gives the impression of wanting to be anywhere but where he is. Some of his colleagues in the States are increasingly entertaining the possibility that the Treasury’s flagship policy may have to be presented to the States by someone other than the Treasury Lead.

Fifth, they need a solid base of support among deputies – a group who can be relied upon to provide, say, half to three-quarters of the votes needed to get the policy approved. In this case, the Treasury Lead’s natural allies, including the Guernsey Party which he leads in the States, are among those most strongly opposed to GST.

It’s hard to imagine the rest of the Assembly spending all of its political capital helping Deputy Helyar to drive through GST in the teeth of public outrage if he can’t persuade his natural allies to do the same.

Pictured: In February, three members of the Committee for Economic Development - clockwise from left: President Neil Inder and the Guernsey Party's Simon Vermeulen and Nick Moakes - wrote an open letter criticising GST and suggesting that decisions about tax needed to be deferred for a year.

None of this is to be celebrated.

The exact size of the looming deficit in public finances can be disputed, but even the most optimistic assumptions put it at tens of millions a year, potentially inside the next five years.

Deputy Ferbrache was serious when he told a recent Express podcast that rejection of GST at the end of this year would probably leave his Committee with no choice but to return to the States in 2023 with a programme of swingeing – my word; I think his was ‘significant’ – spending cuts to balance the books in the medium to long term.

That should provide the sixth ingredient committees need to persuade the States to do things they would rather not – a burning platform. That’s what got zero-10, solid waste and secondary education (nearly) over the line.

Pictured: Deputy Peter Ferbrache has tried to get across a simple message to his colleagues - that the time has come to back big tax increases or big public spending cuts.

But even that may not work on tax. Most deputies can see the flames and smell the smoke but suspect the hoses have not yet been fully turned on and doubt the extent of the damage anyway.

Such thinking is emboldened every summer when the States publish the previous year’s accounts, which invariably show more income and less expenditure than forecast, sometimes by a sum greater than the projected long-term deficit, as in 2021.

The organisers of Sunday's march may have wondered why they bothered, given that so few people turned out in support. But they should not worry.

Boris Johnson has more chance of leading the Conservative Party into the next UK general election than the Policy & Resources Committee does of getting GST through the States at the end of this year.