Tax rises still being considered
TAX rises are still being considered as the States faces a looming £40 million black hole as well as having to fund unexpected additional expenditure, the Treasury Minister has said.
And while Deputy Susie Pinel said there would be no new taxes included in this year’s Government Plan she reiterated her previous warning that increases would need to be implemented sooner rather than later.
During a Scrutiny panel hearing, Deputy Pinel said that recent States’ decisions, such as aiming to become carbon neutral by 2030 and providing more funding for the arts, had increased government funding requirements and would have to be covered by increases in States income.
However, she said tax rises – outside of the usual impôt increases – would not be included in this year’s Government Plan, which is due to be unveiled next month.
The Government Plan replaces the Medium Term Financial Plan and sets government spending levels on a rolling annual basis.
Financial forecasts suggest that the States is facing a £30 to 40 million shortfall from next year.
The minister said that voting against Deputy Montfort Tadier’s recent proposition to increase funding for the arts was a ‘difficult action’ but she had to as she knew there ‘wasn’t the financing for it, much as I would like there to be’. The proposition was ultimately approved by the States.
‘Because the States agreed it, we are going to have to fund it,’ Deputy Pinel said. ‘Quite how, I’m not sure. There is only so much we can fund.
‘If we are to continue to expect the standards currently received of services, of arts and culture, of transport, of infrastructure, of sport, then we have so many demands on the purse and therefore we have to look at ways of funding that.’
She added that it was not in the current plan but the only way to maintain expected service levels would be to ‘increase tax income’.
Deputy Pinel added that the full impact of the States commitment to carbon neutrality by 2030 – made after the States approved a proposition from Deputy Rob Ward – was not yet known and the Environment Department were currently reviewing the matter.
Assistant Treasury Minister Lindsay Ash revealed a potential ‘car tax’ and added that Environment Minister John Young was keen to see the introduction of green taxes.
When asked whether tax changes might be included in this year’s plan, Deputy Pinel said: ‘Not for this year. It will be the standard budget increases in impôt duties.
‘In order to support, for instance, the climate change proposition which is going to cost money and needs to be financed, we have to find a way to finance all this capital expenditure and that will be, perhaps, in the next budget.’
She added that her department was looking at the possibility of a ‘car tax’ for high-polluting vehicles among other potential options.
‘We don’t have the time to introduce too many taxes, if any, this year,’ she added.
The minister also said her department, alongside the Education Department, were reviewing the university funding model, whereby tuition fees for students from households earning under £110,000 per year are covered as ‘we have to re-evalute whether that is still affordable’.
The Corporate Services Scrutiny Panel was chaired by Senator Kristina Moore with Deputies Steve Ahier and Jess Perchard and Constable Karen Shenton-Stone sitting.