Goods and Service Tax the answer?

With the unemployment rising and the other financial problems arising in the Island, it is almost certain that the Tax income will fall, so how would the Island fill this blackhole...

Is Goods and Service Tax the answer?....

Or could you see a better way of raising the lost of Tax income?...

No, GST is not the answer. It will hit the lowest paid, hardest; it puts further burden on business to collect; it is too easy an option to raise. Increasing tax further in a recession will simply take more money out of the economy.

We need to concentrate on savings first, before we resort to tax rises. Public servants on the doorstep in the last week know where the inefficiencies are and are full of ideas for savings. These need to be captured.

It's the easy way - so chances are it will be THE way!!!! But Jersey people's spending took a nosedive when they put GST up - so it does not raise as much as expected - but it does affect the lower/fixed income members of society and is a bit like trying to get blood out of a stone!!!! (also the cost of implementing it is not unsubstantial) .... but as I say - it is sooooooooooo easy!!! I really think pruning the 'top heavy' civil service is the best way to raise funds! + also, while the pruning shears are out maybe the amount of States members could be trimmed!

Its expensive enough living here without bringing in a sales tax although I think its already a done deal and its only a question of when rather than if it starts. Karma is right, a cull of civil service employees is what should happen, with middle management the starting point.

Any such GST/VAT should be avoided. I worked in VAT fraud UK in the late 80s. Gavin is right - it hits the poor the most, and it becomes expensive to enforce despite the fact that Denis Healey said it would be 'self policing'! There are other far more effective means of raising revenue.

There is still scope to reduce allowances on Income Tax especially for the higher earners (which then benefits the poor effectively), a 20-means-20 approach for those for whom a few thousand in allowances means very little. I certainly would not be averse to paying more tax in this way. It keeps the base rate still 20%.

There is also still scope I believe to raise TRP/Cadastre for business/corporations. Our rates are still no where near those of other comparative jurisdictions. Start up and smaller businesses could be discounted for an initial period if deemed necessary.

Social Security personal contributions for those at the top earnings end could have the ceiling upped or even removed altogether.

None of these measures is introducing new tax structures which would require new staffing, new training and new collection measures - all expensive and counter productive. They use existing structures and staff and familiar methodology.

how about abolishing the 0 part of 0/10 and making it 5/10

No to GST or a sales tax, there are other fairer better options. Savings from inefficiencies and job creation/business creation enabling would be far preferable for the long term.

making the big busineses pay pay their fair share into the economy would help x

You complained about the UK driving business away from the Island, don't you think this would have the same effect ?

Jersey now has income tax, user pays tax, GST, and so called stealth taxes like parking fines which like speeding cameras in the UK are used as much for revenue collection as dissuading speeding or parking.

It will probably not surprise you that Jersey has a structural deficit ( black hole )
as does Guernsey.

What to do ? firstly taxing peoples disposable income basically affects large and small businesses who rely on peoples spending to make a living and employ people and pay taxes. However most people in the civil service or even Government if put in charge of a small business would collapse it within a year and yet they make decisions for the islands economies.

Suggestions for the way forward, firstly it is unheard of in other countries for any business foreign or local to take the money locally and not pay taxes in that country. This must be put right. Call it anything you wish based on turnover with sliding scales.

gavinstpier above is correct, Government should suffer serious and effective checks and balances to make sure the taxpayers pound is being spent wisely, only then and as a final resort should taxes be increased.

Overstaffing of public servant pen-pushers is known to be a main cause while understaffing of front line services is common. If chief executives are doing their job properly then the states departments should not be fear full of time and motion consultants searching every corner of their mini empires. At the moment the mention of the name time and motion are looked upon with distain, but not in the private sector that funds all that Government spending of your money.

Raising taxes higher does not work if the deep well, into which the money goes is a bottomless pit as has been proved by Jersey with its burden of taxation changed from business to the working residents.

Finally what should your Government be actually doing, are they working in areas that really should be left to private small and medium companies. A excellent letter from Roger Bale looks at the situation. Please follow link.

http://planetjersey.co.uk/forum/index.php/topic,980.msg12493.html#msg12493

BB

Personally I think GST would be the thin of the wedge, once you have a Tax in place, it is simple to use it as a replacement for economies in other areas, and increasing it is a simple act in the Budget.
Before we start to speculate on the size and cost, efficiency or otherwise of our Public sector, we need to have a lot more transparency in this area, I don't think any of us really knows the size of our Public service, or its cost in relationship to the total tax take.
In simple terms, our Taxes are the revenues that the States has to spend, and like any business, if you don't balance your revenues versus your expenses, you end up losing money.
Governments have a nasty habit of spending our revenues without thought to what value they are getting for them, and then just raising more revenue through Tax when they run out of money. It feels like Guernsey is in this sort of cycle, but we can't really put our fingers on it, because we aren't given access to the full picture on costs with the Public services.
Sometimes I have to pinch myself to remember that we are only 63,000 people, with about 25000 households, as we seem to have an infrastructure in place to support twice that many.
Until we can get clarity on where all our Taxes go, it is going to be difficult to understand the solution to reducing our costs rather than raising more Taxes.

kingcolemk wrote:You complained about the UK driving business away from the Island, don't you think this would have the same effect ?

why would it kingcole ..they paid tax on profits before our deluded government brought i 0/10...they now pay profit tax to the uk in full instead of to guernsey coffers...do you as a uk resident think that situation is fair to islanders x

Government needs to realise the £31m of FTP savings which would eliminate the structural deficit without the need for GST. A recent report by the National Audit Office showed that Guernsey had a lower cost of government than Jersey, IOM and the UK but there are always savings to be made.

do you have a link to that National Audit Office report please?

Hi, having checked, it was not actually an NOA report but a KPMG report on Performance Benchmarking undertaken by Jersey.

Cost of government per head of population

Guernsey £4,244
Jersey £5,132
IOM £6,851

I have been unable to find a link I am afraid.

Fascinating, Scott
I sometimes wonder if it is just fashionable to knock the States.

Thanks for that, be nice to know when that was done.

Having been in eight years now I don't want to be overly defensive. There are lots of things the States do wrong, not because it's a bad setup, but because Deputies are ordinary people, with failings and blind spots like anyone else. There are things going right though, no external debt, low levels of unemployment, good pension reserves for public pensions and employees, good public services, a decent contingency reserve fund and comparatively low cost of government. Good news stories do not sell newspapers however.

If the States did a better job of publicising the good news and being open about the bad, we would have a healthier relationship with the public I think.

Thistle wrote:

kingcolemk wrote:You complained about the UK driving business away from the Island, don't you think this would have the same effect ?

why would it kingcole ..they paid tax on profits before our deluded government brought i 0/10...they now pay profit tax to the uk in full instead of to guernsey coffers...do you as a uk resident think that situation is fair to islanders x

I need you to explain that to me please. How does that work ?

they pay the tax on profits in the country where the head office is domiciled.before 0/10 banks paid the guernsey 20% to us and part to the uk taxman ..now uk taxman gets the full amount as banks dont pay guernsey tax on profits

Banks do not pay UK tax on profits generated and maintained abroad. That's the whole reason why you have a finance industry.

Mind you I do think you have become very over dependant on it and in the changing world economic climate you may regret that.

i can assure you we are not abroad ,

Guernsey people know that - they have long memories and there was a time (before the EUC) that guernsey tomatoes were the very best and it was, together with fishing, our main export....then the Common Market came along and all their growers got subsidies putting our beautiful tomatoes off the menu!
Now the powers that be have been doing the same with the Finance Industry.....a lesson NOT learned!

now the greedy uk government is charging our flower growers vat on exports to that greedy country called england.how long before our flower growers go out of business because of the greedy tory government