1

Chris G

The reality is that the Policy Council is now going to have to say it got it wrong all along and that the zero-ten regime can be amended in order for it to continue. All of this still leaves Guernsey with a budget deficit to face up to, with no hope of having extra income from compaines now on the horizon. This will no doubt increase the pressure on the authorities to cosnider alternative taxes, such as a GST or VAT by another name. Either that or further cuts to public services.

It is not sufficient for the Policy Council to chalk this one up as an overall win; they have been caught out by the success of the Jersey / IOM arguments on zero-ten and have now left us even more exposed to damaging new taxes or equally damaging cuts. Deputy Fallaize is right when he questions the judgement of those concerned. It is clear that the powers that be in this island got this one badly wrong.

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3

Dave Jones

I don’t think the PC got it wrong at all and while Deputy Fallaize is undoubtedly a very bright chap, I would still as a member of PC take the advice of Deputy Parkinson, Deputy Trott our Treasury officials and the other members of the fiscal working group on what the possibility of moving our corporate tax rates might have been should we find ourselves in that position.

This is how I understood it, firstly the Code of Conduct group could not argue that Zero 10 was not compliant as it clearly was, so they shifted the goal posts and argued that it was not in the “spirit” of the code. Senior Ministers from the PC were in dialog with a key member of the CoCG which was the United Kingdom Treasury and officials from that department advised us at that time that the fall back position of all the dependencies would be to examine a presumed higher corporate tax rate, the 10% figure was given as an example. other rates in other jurisdictions were also mentioned 12% in Ireland and 7% I think it was in Malta. The PC, or rather some of those dealing with the matter said we would look at that and told fellow deputies that would be the case but at the same time both Deputy Parkinson and Deputy Trott made it abundantly clear to everybody that we would do nothing until we were clear that our competitors were looking at the same possible solution. It was also made crystal clear that we would remain competitive as an international finance centre and do nothing to harm our economy in isolation of everyone else. The Chief Minister also made a statement to the States reinforcing that view. The UK Treasury understood that, as did the Code of Conduct group.
Jersey and the Isle of Man decided to seek further clarification and as a result were subject to a review by ECOFIN, that review eventually decided that apart from the issue of deemed distribution which Guernsey had already addressed Jersey was basically told that if it moved towards Guernsey’s position on deemed distribution then they would accept that there were no longer any harmful issues. We have as a result not had to do anything, the Policy Council has held the line and not rushed to recommend change to the tax rate, other than to warn the states that we would need to examine a fall back position if needed, something I suggest all sensible governments would do in order to maintain some stability in the core industry of its economy when it comes under threat. I am happy that the members of PC have not mislead anyone nor did they over react our Treasury Minister is not a man who recommends snap decisions.
Now of course it does present us with the dilemma of addressing the structural deficit but we will now in my view have to enter into talks with the business community to see what more they can do to contribute to this community, rather than shift any further burden onto the people of Guernsey. However knowing what I know about the EU, this may not be over yet, it could be that the attention of the EU Finance Ministers has moved on to more pressing matters, like the survival of their own currency and possibly the EU itself.

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5

Terry Langlois

Chris G – I totally disagree that we have been caught out. Jersey has chosen to sacrifice an essential component of zero-10 in order to keep it alive. But that sacrifice will cost it a lot of money (even more than the deficit caused by the original basis of zero-10).

I do not want us to simply follow Jersey and keep zero-10 in its modified state because that would leave a big hole in our finances.

I would much rather than we continued on our path of a territorial tax rate of 10%. We would still be attractive to overseas investors but would get tax revenue from local businesses. That is a sustainable basis on which to structure our tax system.

Matt Fallaize’s question is wrong. There is no reason to question the judgement that caused us to declare a presumed tax rate of 10%, but we should now press ahead with it and not be swayed by Jersey’s folly.

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7

Ray

You could be right Jack

A better use of question time might be for Matt to enquire of the CM which SIDE of the multi million pound fishing dispute requested that the amount of taxpayer funded compensation should be kept secret from the taxpayers

If it was NOT our side then all suspicion of a plot to cover up a massive error of judgement by a prominent figure in the top pay echelons can be put to bed

A simple ‘It was our side’ or ‘It was not our side’ should suffice in view of the fact that several people will know the true answer (and of course the amount of compensation)… but one little step at a time will do for now

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9

Paul Le Page

Jack

I’m really not quite sure what to make of your rather rambling comment.

One minute you’re telling us Matt Fallaize is the power behind the throne at Education, the equivalent of Vladimir Putin to Carole Steere’s Dmitry Medvedev.

The next moment you’re complaining that he’s done “diddly squat” in the States except talk and that we need people who will make decisions.

They can’t both be true. If Deputy Fallaize wields the power you claim he does that would require both action and decisions – the two things you claim he hasn’t done.

Can you clarify what you’re trying to say?

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