Tax rises certain
Saturday 25th April 2009, 2:30PM BST.
The Institute of Directors seminar held at The Duke of Richmond yesterday also addressed the subject of Guernsey and Jersey working together. Left to right are Chamber of Commerce president Paul Luxon, IoD member Andrew Ozanne, Chamber member and event moderator Mark Trenchard, Giba chairman Paul Meader and the chairman of Confederation of Guernsey Industry Peter Budwin. (Picture by Steve Sarre, 0761817)
TAXES will inevitably rise because of plans for the States to borrow, according to business leaders.
The G4 – the Institute of Directors, Chamber of Commerce, Confederation of Guernsey Industry and Guernsey International Business Association – yesterday made it clear that Treasury’s plans to borrow £175m. for capital projects will hit islanders in the pocket.
They took that view because they did not believe the States would be strong enough to take tough decisions on cutting expenditure.
But they did speak with virtual unanimity that borrowing was the right way forward.
Two of those groups – the IoD and CGi – have also expressed reservations about elements of the fiscal framework that will set out rules on borrowing, although both stressed they still supported it.
That framework sets a cap on borrowing at 20% of GDP and uses a long-term pastaverage as part of the justification for that.
But the IoD or CGi point out that the implications of zero-10 would not have been taken into account fully.
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A wise man once said;
We contend that for a nation to try to TAX itself into prosperity; is like a man standing in a bucket, then trying to lift himself up by the handle.
A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money.
Allow it to happen; you’ll remain poor for the rest of your children and their children’s children for the rest of their lives.
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News for the Gang of Four of 2009. Taxes have already risen adnd have been rising for the past few years.
Seems the lads are softening us up for more taxes, paying more for existing services etc.
Not sure what Mr Mann means by “But the IoD or CGi point out that the implications of zero-10 would not have been taken into account fully”
Perhaps it means that a proper risk analysis was not taken before Zero 10 was introduced?
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This really must be the time when the States seriously looks at the ridiculous cap on Social Security contributions which results in the lower paid contributing a higher percentage of their income than the better off for exactly the same benefits. Where is the justice in that?
All should pay according to ability.
Until this is done the gap between rich and poor will get wider.
I am sure that if the rich are being taxed so heavily in the UK, they won’t mind paying the same rate as the ordinary Guernsey man. If they don’t pay their way, do we REALLY want to encourage them to come here?
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Get rid of government type pensions now no further tax increases will then be required!
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I have always said that the men who make the big decisions in Guernsey are not the likes of the Policy Council or other members of our Government but bigger more sinister men, hence Z10 brought in by crooks for crooks. Z10 is the main tax dodge arm of a tax structure implemented by a tax haven or is it a low tax jurisdiction…….so many different terms being banded around these days……
Why should I and other low middle earners in Guernsey pay more taxes subsidising these crooks in suits that have brought the financial world to its knees.
I suggest that our States bring in the same tax bracket the UK have. Lets see if the so called G4 (sounds like a dodgy boy band) support this move.
We need both economic and social policies that will curb immigration, cut unnecessary spending, support those who need tax breaks, stimulate the housing market, cut poverty, bring in a more realistic tax and social security sealings that does not take from the poor and give to the rich but a system that is fair and balanced.The finance industry does not care about Guernsey. The finance industry takes, takes ,takes………..The crooks will always win in this island……………
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It seems the island is stuck between a rock and a hard place. We have:
- Demand for public capital expenditure
- The potential for government borrowing
- The need for a low tax arrangement to attract and retain offshore finance
Surely these three factors cannot peacefully coexist?
If we raise taxes, what will it do to the finance industry, like it or not the backbone of our economy?
If we do not raise taxes, how will we fund the borrowing or extra capital expenditure?
If we stop capital expenditure, our public services will decline at a greater rate than normal.
Now I’ve never claimed to be an expert in economics but am I missing something here? Some insight would be welcome!
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Pete Burtenshaw is talking narrow minded nonsense about the finance industry “taking” from locals. Who do you think provides most of the well paid jobs for locals? And what do those locals spend their wages on – they spend them on Guernsey taxes, goods form local shops, building work by local builders, cars from local car showrooms, meals in local restaurants etc. – all of which lead to more jobs and more prosperity.
I do however agree with his point about Zero 10.
Local people should not be subsidising an industry which benefits (massively) from our low tax regime. Many people who work in this sector, including myself, were opposed to Zero 10 from the outset – it cut off our Island’s main income stream without offering any alternative and now we are all expected to pay the price.
Our States representatives seem incapable of original thought and are constantly worrying about what our competitors are doing (why do we always have to follow, why can’t we lead ?).
Borrowing only increases debt, it does not resolve the problem of insufficient income. Why not accept that Zero 10 was a mistake and reintroduce a more equitable tax system that imposes a modest level of taxation on those who benefit from doing business in Guernsey?
Never mind fretting about being unable to compete – I bet you Jersey and the Isle of Man would quickly follow suit and introduce similar corporate taxes if we did this – they need revenue just as desperately as we do.
This won’t happen of course because it would mean Lyndon Trott and other States members admitting they were wrong which they are patently incapable of doing.
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Paul L P – yes, it is a dilemma
I think that there are certain capital expenditure projects that simply have to go ahead for the good of the island (the runway and sewage, for starters) but I think that it is fair that these be funded initially by borrowing that is scheduled to last for the lifespan of the benefit provided by the project – so that the generations that benefit will pay for it, rather than it all falling on our shoulders. We should not be scared of borrowing – we all do it personally in order to buy a house or a car, so why be worried about the States doing it for the right purposes?
As for taxes I think that there is room to increase income tax without discouraging the finance industry. We could introduce a second band of, say, 25% so that lower earners would not be affected. It would still not be so high that it would send finance workers elsewhere, and it would have zero impact on the business that is sent here by people that do not live here.
I do not know enough about the net effect of zero 10, but have some sympathy with what CD is saying. But in reality I expect that we just have to live with it for now.
I also suspect that GST is inevitable, but if we are going to do it, lets make it worthwhile rather than copy Jersey’s pointless 3%.
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Dont bring in GST or VAT it just hits the poor and will result in more crime. Income Tax is at least fair but as stated you would save millions by putting everyone on just the Government state pension – Police, Civil Servants the lot!
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TL
I agree totally with you. In fact, those who are debating our borrowing needs/priorities seem to be missing an obvious trick. The talk is all about only borrowing if there is a connected revenue stream, but surely one guaranteed revenue stream is GST.
It is estimated that introducing a GST of 10% would generate £90m a year. 5% would generate £45m a year. (3% in Jersey generates £45m a year). So why not introduce GST and ringfence all GST collected to servicing the borrowings to enable the capital projects to go ahead ? Islanders would then know that the reason for the GST is directly and solely because it is financing essential infrastructure projects. Its a guaranteed income stream as well, subject of course to the public’s spending patterns not materially changing.
Andy – GST/VAT only hits the poor if the tax system is not adjusted to ensure that the lower paid get fully reimbursed for all GST suffered, either by way of actual Social Security credits and/or by raising the income tax exemption limit so that they don’t end up paying both GST and income tax. Its not difficult to design a tax system whereby nobody would have to pay Income Tax on incomes below say £40k a year, and so that those earning under £20k receive actual monetary tax credits to refund the GST that they have suffered at the tills.
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Perhaps Nick Mann or someone at Guernsey Press will respond to my request to explain “But the IoD or CGi point out that the implications of zero-10 would not have been taken into account fully” in the headline post. Or is it mumbo jumbo?
I though the proposals of David re GST and income tax adjustments (a la Isle of Man?) were worth looking at when he raised them some weeks ago.
They seem even more worthy of consideration today.
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Stephen – I’ve been asked to post the following in response to your query:
‘The economic uses historic data from gross domestic product (chiefly wages and profits) and the IoD/CGi case is that post zero-10 you cannot rely on the historic perspective since the corporation tax element of profit in GDP has been given away.
Moreover, since we haven’t experienced the full impact of zero-10, it is even more dangerous to rely on past data.
It’s a complex matter to explain and the story was condensed for the web.’
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‘G4′ I nearly wet myself with laughter. The G4 are headed up by whom? Chairs of monopolies and supporters of zero/10
It’s a pity they could not have been more frank at the start of the zero/10 debate instead of rubbing theur hands at the thought of the extra profits their respective companies would make.
Appalling
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Pete Burtenshaw
Different website, same old tosh about the finance industry taking everything and giving nothing.
As CD said, just how many shops/bars/restaurants/builders/taxi drivers etc etc would be in business if it wasn’t for the income generated by the finance industry. No doubt we’re soon going to see the line about us being better off when we grew flowers/tomatoes or some other such rubbish
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This is guernsey
Thanks for the reply “‘The economic uses historic data from gross domestic product (chiefly wages and profits) and the IoD/CGi case is that post zero-10 you cannot rely on the historic perspective since the corporation tax element of profit in GDP has been given away.
Moreover, since we haven’t experienced the full impact of zero-10, it is even more dangerous to rely on past data”
If this is the case how can the 2009 gang of 4 justify borrowing of £175 million, if they are concerned about the value of past data, data on which the proposed borrowing is based.
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Past projects have on average come in over budget by around 20% …… end of story.
Borrowing = bad.
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I agree with CD – lets try to find some way of reversing zero-10.
I guess the question here is if we had not introduced zero-10 (and found an alternative) would business have left? I suspect not. So lets find an alternative and not borrow.
In conjunction with this the States must find ways to save and become vastly more efficient.
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So who appointed the Chamber of Commerce, the IoD, Giba and the Confederation of Guernsey Industry (“G4″ – I also nearly wet myself laughing..) to say what the fiscal policy of Guernsey should look like?
Call me naive but I thought that role was already taken by the States of Deliberation and the civil servants.
I don’t think that the opinions of “G4″ have any greater relevance than mine (or any other taxpayer).
I do wish that the Guernsey Press would stop publishing the drivel spouted by such organisations (and treating it as if it were the gospel).
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Pete Local
How insolent of you to question the self appointed great and the good!!!
I suspect a daily “local” newspaper has to publish such drivel plus photo simply to fill space.
It has been proved time and time aagain that You Shout has more perceptive correspondents that the 2009 gang of 4.
How many times have you seen something appear in these columns and a few days later re-harshed by some accountaant, banker or whatever.
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Surely it is time to look at charging income tax on a sliding scale depending on what each individual earns?
Lower earners cannot be expected to keep digging in their pockets to support the people who can easily afford to pay their way.
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Stay with income tax its the only fair one.
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