Monday 05 January 2015
At its meeting on Monday 5 January 2015, the Policy Council considered a draft of the Treasury and Resources and Social Security Departments' joint report on the Personal Tax, Pensions and Benefits Review.
Deputy Allister Langlois, Deputy Chief Minister and Minister of the Social Security Department said:
"During the middle of 2014, we met with States members in Guernsey and in Alderney in a number of small meetings in order to discuss the aims of the review, and the progress that was being made following the public consultation process. However this is the first time that we've been in a position to get feedback on the draft report from politicians outside the ten involved so far from the two Boards. We will now take their comments on board as we finalise the draft over the next few weeks.
"There is still much work to do to finalise the Report but given its size and its significance, we would like, if possible, to publish it a couple of weeks earlier than the normal deadline to allow more time for its consideration before the States debate it. We are therefore aiming to publish it in early February for an end of March States' debate - although we recognise that timetable remains very tight."
The report focuses on the next steps needed to secure five over-arching objectives:
- Incentivising people to work and support themselves;
- Ensuring the personal tax system is competitive in comparison with other jurisdictions;
- Encouraging and enabling people to take responsibility for their financial well-being later in life;
- Ensuring that the tax and benefits system is sustainable and as far as possible efficient, fair and simple;
- Ensuring that States' expenditure is controlled and public money is used efficiently.
While the Report will be making a number of specific recommendations and envisages a lengthy transition period for any changes, it will not be recommending or seeking approval for the introduction of a Goods and Services Tax. It will, however, be recommending that the Treasury and Resources Department be directed to undertake further research on the implications of introducing a broad based consumption tax.
The Minister for Treasury and Resources, Deputy Gavin St Pier said:
"The joint boards believe that in the long term there may be a place for a GST-type tax in our tax system, and it should therefore remain on the table as an option. But at the same time we recognise that there would be a lot more work required before the States could be asked to make a definitive decision. For example, we would need to do more work to understand the true costs for the community, business and government of its introduction, and to have a clear view as to what steps could be taken to mitigate any of the impacts of its introduction.
"We don't want to waste time and public resources in further exploring those issues unless we know the States agrees with us that we should continue to be open-minded and keep looking at it as an option."
Deputy Langlois added:
"We were pleased that the Policy Council unanimously endorsed this approach."
Deputy Dave Jones, the Minister for Housing commented:
"The issue of GST requires a lot more consideration and I am relieved that the whole Tax and Benefits review is not going to get bogged down or hijacked by this one single issue. I am pleased that the subject of GST while still on the table will be reviewed thoroughly in its own right and scarce resources will be concentrated on other areas that might be more productive at this stage of the review.
"I support the work that has been done by the joint boards. It is clear that if Guernsey is to have a sustainable future in terms of States' revenue, then we must do what we can to broaden our tax base and address the issue of funding those reliant on the benefits system, especially given the ageing population and the volatility of a shifting economy.
"I am particularly supportive of the joint boards' proposals to introduce a cap on the total amount of tax, social security and other charges which government can take from islanders. Having that kind of constraint is a really important discipline to ensure we live within our means."