Successor will have to raise taxes, says Treasury Minister
THE next Treasury Minister will need to find more than £25 million of funding and raise taxes to cover additional costs during the next States term, the current minister has warned.
Senator Alan Maclean said that £11 million of extra spending approved by the Assembly this term, such as the States paying rates and reinstating additional income support for single parents, would leave his successor needing to raise taxes following May’s general election.
During a hearing of the Corporate Services Scrutiny panel, the minister explained that an extra £15 million would need to be found towards social security funding in the next Medium Term Financial Plan, which starts in two years’ time.
‘The current grant to Social Security was frozen in the current Medium Term Financial Plan at £65 million,’ Senator Maclean said. ‘In the MTFP for 2020 it will increase to £80 million. That will be an additional cost to be taken into account for that MTFP.’
The minister said additional revenue needed to be found in the last budget due to States decisions which increased spending or reduced income.
‘The health charge, which the States rejected, was to raise £15 million by 2019. Measures in Budget 2018 raised £12.3 million, which is most of that,’ he said.
‘These included the retail tax, which has been estimated to raise £5.7 million, and there was the impôt duties, as well.
‘We have also brought more financial services business into the corporate tax regime, raising £3 million.’
He added that there would be a number of extra costs in the next MTFP, which were also due to States decisions. ‘The waste charge has had to be deferred for future consideration. We are still expecting to balance the budget for 2019 but the waste charge was intended to raise £11 million,’ he said.
‘We have seen at this time some growth [in expenditure] of around £11 million based on decisions of the States. The next Treasury Minister, because of that growth, will be required to decide on either the waste charge or other revenue-raising measures being introduced.’
During the hearing, the minister said, however, that he expected ‘many millions’ would be saved by the new public sector streamlining programme, which was announced by chief executive Charlie Parker last week.
‘We targeted £77 million of savings [under the previous savings programme] and by the end of 2017, £49 million of this has been delivered,’ he said.
‘I was delighted with the announcement of the new chief executive that he would be streamlining government further and improving the quality of services.’
He added that he believed millions could be saved by the initiative if it tackled the ‘silo’ mentality in States departments and the number of States offices were reduced from the 23 that currently existed.
The hearing of the Corporate Services Scrutiny panel was also attended by panel members Senator Sarah Ferguson and Deputies Simon Brée and Kevin Lewis.