Stopping short of calling it a last resort, Treasury Minister Susie Pinel told the Corporate Affairs Scrutiny Panel yesterday that there were other levers and mechanisms that should be looked at first before any consideration is given to increasing taxes for everyday Islanders.
However, the minister warned that an increase in the Long Term Care charge – currently paid by Islanders at a rate of up to one per cent of their income – is on the horizon as the fund, which pays for those in long-term care, is ‘just about balancing’.
She also said that proposals for a commercial waste charge deferred by the previous States would have to be revisited otherwise an alternative way of raising the £11 million it would have brought in from this year would be needed.
Deputy Pinel’s comments come just days after Chief Minister John Le Fondré announced that savings were needed as forecasts pointed to a structural deficit in public finances of £30m to £40m by 2020–23 unless action was taken. He had also previously said that tax rises would be needed to fund the priorities ministers have proposed.
Asked by the panel how ministers planned to fund those priorities set out in the recently published Common Strategic Policy in light of the current financial situation, Deputy Pinel said that a plan would be brought forward providing the detail.
She added: ‘The Chief Minister did mention tax rises – I didn’t. But something, somehow has got to pay for this. We have to address the possibility of that but there is nothing in the 2019 Budget that is a tax rise. All sorts of things may have to increase – the Long Term Care fund is just about balancing, we need to increase the charge of that, which I know some people see as a tax because it is taken on your income, but it is ring-fenced for long-term care. But with an ageing demographic we have got to look ahead to ensure it can cope with demand.’
She added that there were a series of levers that could be used. Increasing personal tax would not be a last resort as such, but undesirable. ‘We all see, as the government and Council of Ministers, that funding the Island is not going to get any cheaper so somebody has to pay for it. At the same time you have to remain competitive with other jurisdictions,’ she said.
Meanwhile at the hearing, Treasurer Richard Bell said they were aware of some States departments that were having issues staying within their existing expenditure limits, for example the Infrastructure Department, as a result of shelving the waste charge. Deputy Pinel said that specific proposals to charge businesses, charities and other organisations, such as schools, around £150 for every tonne of solid waste that they threw away, as well as a separate waste-water charge of £2.27 per cubic metre would need to be revisited.
‘I think it will have to be revisited, the commercial charge rather than the domestic one, which was rejected by the States,’ she said. ‘I am not minded to bring it myself. It was not a Treasury proposition last time.’
