ONE of the reasons islanders are facing tax increases of around £20 a week is that although they have to live within their financial means, the States refuses to do so.

Confirmation of that is provided by N. M. Rothschild and Sons Ltd in its so-called Project Norman report looking at government’s capital funding requirements and how best to borrow to meet that requirement.

Treasury and Resources have presented Rothschild’s findings as a shock, horror critique of the consequences of zero-10, which is why T&R wants to impose an additional £52m. tax burden on islanders, rising to £66m. – or £28 per person a week – by 2017.

Their consultants, however, say that an alternative to tax rises would be the States controlling expenditure, as envisaged in phase one of zero-10.

Rothschild also makes it clear that Treasury has declined that advice.

Instead, it has been asked to model on what it calls ‘budget tightening’ of RPI -2%, which is nowhere near enough to balance the books without taking more money off islanders.

In the hands of T&R, the report has the potential to inflict even more damage on the wealth of individuals here.

The authors note that current tax levels are comparatively low and rates can rise and/or new taxes be introduced without jeopardising Guernsey’s competitive tax position.

For tax and spend deputies, that’s a gift.

T&R has even suggested that the unthinkable – raising income tax from its decades-old 20% – is not only possible but desirable.

Bring in GST at ‘only’ 3% and suddenly, income tax is 25p in the £ and the tax on goods and services is up to 10% because all the barriers urging restraint have been swept away.

With the capital prioritisation report, Guernsey now stands at a crossroads.

Rothschild notes that the island’s conservative fiscal policies and robust economy enable it to borrow now.

But if government gets a taste for spending what it hasn’t got, where will it all end?