What Next For P&R After Failed Tax Policy?

The dust is settling on Guernsey's tax reforms States debate, but what will happen next for politics, public finances, and islanders' pockets?

After six days of discussion, politicians failed to reach consensus on how to fill the predicted £85 million hole in public finances.

None of the five options for raising revenue and closing the gap got enough support - including the three proposed by Policy and Resources.

Option A, the original GST proposal from P&R, received 15 votes in favour and 25 against.

Its back-up options B & C suffered even heavier defeats.

Option A was P&R's original proposal, including GST.

Option B looked at alternative revenue-raising measures without GST, such as paid parking and a 50% increase in property rates - TRP (tax on real property).

Option C prioritised cost-cutting, shaving £31m off spending on public services.

A 'Fairer Alternative' Option D from deputies Gavin St Pier, Heidi Soulsby and Sasha Kazantseva-Miller suggested a two stage approach:

An initial £50m package of expenditure restraint, social security reform and revenue raising and a second stage of future work to control spending and agree alternative revenue sources, including corporate tax.

It won the most support, but the vote on stage one was tied 20-20, so it was not carried.

Option E, from deputy Peter Roffey, was defeated 18-21.  It included £10m from motor taxes, £6 from property taxes and £19m from social security contribution reforms.

It's unclear what P&R's next move will be, having failed to get such a major policy passed.

Committee president deputy Peter Ferbrache has so far indicated that he will not resign over the loss.

For Treasury lead Deputy Charles Parkinson says unless P&R resign they will be 'walking dead' for the remainder of their term of office.

In any normal parliamentary democracy, when a government loses its flagship fiscal policy, it would resign

— Charles Parkinson (@dep_parkinson) February 17, 2023

Yes, a motion of 'no confidence' is possible, but the opponents of GST within the governing 'coalition' would not support it. Unless P&R resign, they will be 'walking dead' for the next two and bit years. #zombiegovernment

— Charles Parkinson (@dep_parkinson) February 17, 2023

He tweeted that he was considering bringing a Vote of No Confidence in the committee.

Deputy Carl Meerveld, a founding member of the  'Say No To GST' campaign, doesn't think P&R should go.

He's told Island FM:

"They got 15 votes (for GST) out of a potential 40.  It isn't a crushing defeat.  It is actually more votes than I expected.  One has to realise that those 15 deputies that voted for GST were voting with the conscience in what they believed was the best solution for Guernsey.

Any time that any committee pushes an agenda very strongly and it fails, they take a knock.  They lose what I call political capital, but I don't think they are dead men walking.  I personally respect what they have done."

Deputy Heidi Soulsby, former P&R vice-president who quit the committee over the GST issues, says things are still in limbo.

So tonight’s voting fascinating. Option D stage 1 got 20 votes v 20 against so lost on a technicality. However, stage 2 passed. In fact the only propositions that passed were from the Fairer Alternative but it really is can kicking without the immediate revenue raising measures

— Deputy Heidi Soulsby MBE (@HeidiSoulsby) February 17, 2023

She thinks P&R should now consider adopting the 'Fairer Alternative' proposal.

"I think (the next move) should be putting forward Option D stage one, because it went with stage 2 - but that's very much in P&R's court now."

Deputy Sasha Kazantseva-Miller said there had been a lot of lobbying going on that prevented Option D getting over the line.

"Members openly told us that they were “leaned on heavily” and that they were concerned about the repercussions for Policy & Resources’ position if Option D won.

When members called the Fairer Alternative a “prawn cocktail with scorpions”, you know that the arguments against have nothing to do with the substance of the proposals."