States of Guernsey funding requests 'effectively call for tax rises'

Deputy Mark Helyar presented the 2021 budget on behalf of the Policy and Resources Committee

Funding requests from the States of Guernsey are "effectively a direct request for an increase in taxation", a senior politician has argued.

Deputy Mark Helyar, treasury lead for the Policy and Resources Committee, said the current tax base cannot accommodate further spending pledges.

He added the deficit between revenue and spending requirements meant future reductions were "very likely".

Mr Helyar said this predated Covid-19 and borrowing would not resolve it.

The coronavirus pandemic is estimated to have cost the States £120m so far and led to an estimated total deficit of £82m over two years, according to the 2021 budget.

'Increasing efficiency'

Mr Helyar revealed in presenting the budget to colleagues on Monday he sent a "clear message" that asking for "additional funding is effectively a direct request for an increase in taxation".

He said: "This isn't just about Covid, this is about commitments which the States has made to future revenue funding which are current tax base just can't handle."

The deputy explained while there were no decreases in spending in this budget it was "very likely" there would be in the future, with an estimated £80m-£130m shortfall in tax revenue compared to the spending the States has already committed to.

Mr Helyar said: "We don't just have to increase tax, we have to look at saving costs, we have to look at increasing efficiency and we also have to look at improving the economy, because a relatively small amount of economic growth is enough to cover that gap.

"We can't spend money we don't have and we can't borrow it because it needs to be paid back."

He also confirmed jobs are likely to go as a result of efficiency savings and he is not "personally in favour" of any significant increases to or introduction of new taxes.