24th January 2023
Ahead of this week’s debate the Chamber Executive sought views from its members the results of which are set out below.
The Guernsey Chamber is the largest industry body on the island with around 600 members and this survey has generated a statistically significant 233 responses.
Guernsey Chamber of Commerce President Diane De Garis said “What seems very clear is respondents currently either don’t find the government’s argument that we have a deficit credible or find the quantum of the deficit credible. Equally if there is a deficit (which the Executive accepts there is), respondents agree with Chamber Executive that a mixture of fiscal reform from government to achieve savings, a policy platform to get more people working increasing productivity alongside some form of tax package that isn’t GST would be the preferred option. This isn’t surprising given the public sentiment against GST and the results broadly align with the Chamber Executives views.”
55% of those surveyed have been convinced by the government that there is actually a deficit. Of the 45% not convinced most cite the lack of accurate accounts, the conflicting surplus/deficit statements from successive budgets over the last 5 – 10 years and confusing capital spend decisions as the reason. Of the 55% that were convinced, many were not convinced of the size of the deficit for the same reasons.
The Chamber Executive set out some options for what members thought would be an appropriate way to deal with a deficit. Only 8.9% of those surveyed thought GST was the best option. 47.8% agreed with the Chamber Executive that there needs to be a plan that included a mixture of civil service and pension reform to achieve savings, tax rises and, most importantly an increase in productivity in the workforce. 21.6% favoured a straight rise in income tax, marginally ahead of 20.7% of respondents who wanted to see large cuts to government core services.
89% of all surveyed agreed with the Chamber Executive that policy action to address the workforce productivity and size could or should be the priority.
70% of all respondents thought there would be some impact to their business if GST was brought in with most impacts described as negative.
Finally, the Chamber Executive note the various substantive amendments and has the following comments:
The Parkinson/McKenna Amendment – Whilst it is accepted that such a tax (Territorial 10) could in theory work, the uncertainty on investigation of such a designer tax would be dangerous and very likely cause significant damage to the islands finance sector which contributes 37% of all GDP and indirectly as some estimates suggest as much as 60+% of all GDP. There are several ways corporate tax could be increased to raise as much as any Territorial 10 tax without the damaging uncertainty for the islands primary source of income the design and implementation of such a tax would bring. Add to this such a tax will not raise enough to be a credible alternative to GST by itself, the Chamber Executive strongly urge all deputies to vote against this amendment.
The Soulsby/St Pier Amendment – The Chamber Executive note this option most closely aligns with our member’s views in that it does not include GST as an option but does include other tax rises and spending cuts and importantly addresses the public sector pension which needs reforming. What it does lack is any consideration of policy to increase the work force size and productivity which urgently need addressing. Overall, this is a credible alternative to the P&R policy proposal, but further work would be needed on workforce productivity.
Stephen Rouxel, Finance Sector Lead who curated the results had this to say on the various amendments “The Parkinson/McKenna amendment is, quite frankly, dangerous, to the islands finance sector with the uncertainty and potential consequences. Very few jurisdictions are taking this course of action and we certainly should not consider it unless it is in conjunction with Jersey and other crown dependencies. I would urge all deputies to vote against this amendment.
James Ede-Golightly, Vice President noted “The Soulsby/St Pier amendment more closely aligns with our member’s views and as such should be given serious consideration particularly the Executive would still like to see public sector pension reform as a priority. Equally the Executive and our members would like to see the workforce imbalance addressed through active government policy changes.”