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With cuts, it’s the services that we consider essential that cost the real money
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That’s the one that will decide how we are to deal with the looming States deficit, and whether we are to have deep cuts in spending, more taxes, a combination of the two, or simply stalemate.
How it will eventually pan out is anyone’s guess because there is little consensus. The only thing there is widespread agreement about is that there is a problem – the States are running out of money – but we can’t even agree on the causes.
It’s undoubtedly true that the recession is at least partly to blame, because there’s less money coming into the States coffers and the States have, quite rightly, spent tens of millions of pounds softening the impact of the downturn. How much of this £44 million fiscal stimulus ‘sticking plaster’ has been wasted and how much has genuinely saved jobs is a matter for debate. We will know in a year or so whether the economy really has been stimulated, but at least it has helped business confidence.
However, the problem is more deep-seated than that. As many of the fiscal hawks have pointed out, Jersey has prospered by being a low tax/high spend society. That was achievable because the finance industry picked up the tab. But times have changed, and so has the tax burden. Individual taxpayers and businesses now realise that they have to pay for the public services they have enjoyed for so long.
Some will say that the solution is to change tack and become a low tax/low spend economy. Slash public services until their cost reaches a level that doesn’t require any more taxes. They call it ‘living within our means’. I call it economic suicide.
• Read the full column in today’s JEP
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