UK lord: If Guernsey P&R loses tax reform, it is time to go

Lord Digby Jones says the States need to focus on their "got-to-haves"

A former UK government minister has called for politicians "to go" if their second bid to reform Guernsey's tax system is a failure.

Policy and Resources (P&R) has proposed £350m of borrowing to fund big projects, including extending the hospital and a new post-16 campus.

It is also pushing for goods and sales tax (GST) and income tax rate changes.

Lord Digby Jones said the focus had to be on the population's needs. P&R said "financial realities" had to be faced.

Earlier this year, P&R's plans for a 5% GST, a lower rate of income tax for earnings over £30,000 and reforms to social security contributions were thrown out by politicians.

The committee has returned with new proposals, including borrowing and plans to save £10m a year, alongside a scheme to investigate hiking a tax on motorists and paid parking.

Lord Jones, who chairs the Guernsey Policy and Economics Group (GPEG), a right-of-centre think-tank which provides commentary on local political issues, said decision should be based on people's needs rather than what politicians want.

He said: "They have come twice now to the well and said: 'I'm putting my strength behind this.'

"If they're being rejected twice, that goes to judgement and it's time to go."

'Nice-to-haves'

He wrote a paper on P&R's plans, stating he would prefer the States opted for "Scenario 1": a plan which would see no new borrowing and limited spending on big building projects.

Lord Jones said the States needed to work out what the "nice-to-haves" were and focus on the "got-to-haves".

He also stressed the need for public sector pension reform, which Guernsey's Chamber of Commerce has argued for.

On the issue of GST, Lord Jones said he was against it and was concerned it would be "ratcheted up" by if the States needed more money in the future.

He added: "The wonderful thing about a sales tax is that business collects it and, every time you run out of money, you just turn the dial.

"You avoid as a politician the difficult subjects and the difficult choices."

P&R President Peter Ferbrache said Lord Jones' proposals were "meant with the best intentions" but they "cannot be put ahead of the financial realities".

He said: "His proposals would take us down an economic downward spiral which would be disastrous, irresponsible and possibly irreversible, and Guernsey should do everything it can to avoid such an outcome."

Analysis: John Fernandez, BBC Guernsey political reporter

Guernsey does not have an executive system of government, something Policy and Resources President Deputy Peter Ferbrache is at pains to stress every time I speak to him.

So having its flagship fiscal policy defeated would not trigger a confidence motion, like in some other parliaments.

Despite this, with about 20 months left of this political term, there is a fear for many within the States that the government will become paralysed by inaction if no clear decision is reached next week on future finances.

There are fears of a "zombie government" limping and crawling over the line in June 2025.

Despite these fears, the current assembly has no appetite for removing people permanently from roles.

Were a vote of no confidence to be lodged in P&R if its preferred plan is defeated, the talk among States members is that it will fail.