Quick summary
This article examines a claim by Deputy John Gollop, Guernsey’s longest-serving politician, that the island needs GST, a new sales tax, to pay civil service wages. The writer credits him for saying honestly what others hide, then puts six questions to everyone backing the tax. Why should everyone’s shopping get dearer instead of the States spending less, when the island had money left over before Covid and spending has never come back down? How is the tax fair when millions must be handed back to soften it, and the States’ own example person ends up £39 a year worse off on its own calculator? Can a service that already has backlogs, and whose calculator contained five mistakes, be trusted to run a new tax at every till? Where are the figures proving that pay is really too low? Will the 3% rate quietly become 5%, as happened in Jersey and as one senior deputy admits is the plan? And why are the sums behind it all still hidden, when even the official forecasts show the money gap will be just as big in 2030? If nobody can answer these questions, the article concludes, the truth is not that Guernsey needs GST; it is that Guernsey needs a civil service it can afford.
Deputy John Gollop says Guernsey needs GST to fund civil service pay, and that he would set the rate higher than the 3% proposed. He deserves credit for candour, and candour can be tested. As the States debates the package this week, here are six questions the case for GST has yet to answer.
Deputy John Gollop, the Assembly’s longest-serving member, was reported by the BBC last week as saying: “The truth is we need GST to fund civil service pay.” He added that he would want the rate higher than the 3% proposed, in the name of fairness, better services and realistic pay.
Credit where it is due. Where the policy letter speaks of sustainability and diversification, Deputy Gollop has stated a purpose plainly, and a plain statement can be tested. He is not the author of the package, and what follows is not addressed to him; it is addressed to the case for GST, of which his sentence is the most candid summary yet offered. Six questions, then, before the vote.
First, if GST is needed to fund civil service pay, ask what “needed” assumes. A shortfall can be met from either side of a budget, by spending less or taking more, and the claim holds the pay bill fixed while making the island’s cost of living the adjustable quantity, since GST raises the price of everything islanders buy; the package even budgets for that inflation by uprating pensions and benefits in compensation. Every household’s weekly shop is to rise so that the wage bill need not fall, and part of the yield will circulate straight back, because GST falls on what the States itself buys and its inflation feeds the next pay claim. Nor is the pay bill fixed in fact. Deputy Sloan, President of the Scrutiny Management Committee and formerly the States’ own Economist, pointed out this week that Guernsey ran surpluses of around £75m between 2018 and 2020, and that the deficit is the residue of pandemic spending that never came back down: a failure of expenditure control, not of the tax system. The States has already committed itself to efficiencies of 1% a year, and the Scrutiny president considers a public sector pay freeze an appropriate response. The package’s supporters must explain why a new consumption tax should precede, rather than follow, that discipline. The likelier truth is that the pay bill must be brought within the island’s means, not the island’s means enlarged to meet the pay bill.
Second, if GST will make a fairer society, its supporters must explain why a fair tax needs tens of millions of pounds a year in mitigations to shield people from it, the income tax reductions alone costing £28m, with pensions and benefits uprated besides. They must explain why Policy & Resources’ own chosen example, the single person on £50,000 presented as better off, emerges £39 a year worse off when entered into P&R’s own calculator on its published settings; the full workings are set out in Check their sums, on this site. They must explain, further, why figures put to P&R at this month’s Scrutiny hearing showed working families with children hit hardest. A fair tax does not need that many apologies; a regressive one does, and the research the island’s business bodies commissioned in 2014 concluded that regressive is what GST is.
Third, if GST will buy better public services, someone must speak to the capacity of the service that would run it. The Revenue Service is still clearing backlogs on the taxes it already has. The public calculator built to explain this very package rendered the policy wrongly in five distinct respects, among them a contribution band omitted entirely, a statutory condition on an allowance dropped, and a relief deducted twice. If the policy cannot be computed correctly on a web page by its own authors, what are the grounds for confidence that it will be administered correctly at every till in the island, in an economy where GST will put a new premium on the cash-in-hand job?
Fourth, if GST will fund realistic wages, those who make the claim should define realistic: name the comparator, publish the figures, and explain why total remuneration that includes pension terms most islanders could not buy for themselves is nonetheless unrealistically low. An assertion of that kind, made on the eve of a vote, ought to come with arithmetic attached.
Fifth, if the rate the package’s supporters actually favour is higher than 3%, they should say so before the vote, in terms. The ratchet is not opposition inference. The Scrutiny president said this week that 3% is a device to carry the framework through the Assembly in the knowledge that it must rise to 5%, and called any pretence otherwise “an insult to our intelligence”. Jersey introduced its GST at 3% in 2008 and raised it to 5% within three years, and the Assembly is already being asked to consider a two-thirds lock against future increases, a safeguard that concedes precisely what everyone expects. A tax should be approved at the rate its supporters intend, not at the rate calculated to secure its passage.
Sixth, if the sums beneath all of this are sound, publish them. The distributional model on which the package’s claims rest, built on some 66,000 records of 2019 and 2020 data, remains unreleased, refused on grounds that several deputies have said do not hold, and the Scrutiny president states that no sensitivity analysis of it exists. His reading of P&R’s own forecasts is that the shortfall in 2030 remains as large as today’s even with the package enacted. So state the net yield of GST alone, after the mitigations, the implementation cost, the permanent administration, the compliance burden on every business, and the inflation uplift the package itself budgets for. Universal care, wider GP provision and the rest of the vision sketched by its supporters cannot be financed from a net figure that no one will state.
These are not rhetorical questions. If they can be answered, this week’s debate is the place to answer them. If they cannot, then the truth is not that Guernsey needs GST to fund civil service pay. The truth is that Guernsey needs a civil service it can afford.