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Guernsey Policy Council Scraps With Scrutiny Committee Over Economic And Taxation Strategy

by Jason Gorringe, Tax-News.com, London

05 June 2007


Following the recent announcement by Guernsey's Scrutiny Committee that it was seeking clarification on the implementation of the Economic and Taxation Strategy, the jurisdiction's Policy Council has hit back, arguing that the Committee should have discussed the matter with Ministers before going public with its comments.

The Scrutiny Committee last month raised concerns that the consequences of the tax proposals debated at the May States Meeting were not sufficiently clear, and that the risks and implications for individuals and businesses might not be fully appreciated or understood.

Chair of the Scrutiny Committee, Deputy Jean Pritchard announced at the time that:

“The Committee has struggled to understand the implications of the proposals for individuals and businesses and the consequences for services to the people of Guernsey and Alderney. A particular concern is that only one brief example is given for the impact of the tax changes on a ‘typical’ Guernsey family. The Committee considers many more illustrations should be given and that all relevant factors, such as the higher cost of living in the Bailiwick, should be included.”

The Committee highlighted proposed increases in taxation and sought clarification as to whether or not real cuts in expenditure were being proposed and, if so, what the cumulative effects on services would be. The Committee also questioned how the performance, impact and effects of the Strategy would be monitored.

Deputy Pritchard added:

“While the Committee commends the amount of work that has been done, it is concerned that the Report does not provide a full, easy to understand picture and there is a real risk of future proposals being overturned at a later stage when the likely consequences become known.”

The Committee asked for greater clarification on the identification of total States expenditure and income, the planned rise in Tax on Real Property, the rises in indirect taxes and social insurance contributions, and an estimated cut in real terms for expenditure on services by over 3% in 2008 with further reductions in 2009 and 2010.

Responding to the Scrutiny Committee's comments at the end of last month, the Policy Council announced that:

"The Council is naturally disappointed that the Scrutiny Committee was unable to find the time to meet with Ministers in order to discuss this most important issue in detail and to afford the opportunity for a constructive exchange of views. Such a meeting would have also provided a useful forum for an explanation and clarification of those matters that the Committee has found difficult to understand."

It continued:

"In the circumstances, the Council has decided to publish its response to the Scrutiny Committee so that States Members, the public and the media are aware of the Council’s views on the many issues that the Committee has raised. In doing so the Council would draw particular attention to the following points: -

  • The Scrutiny Committee recognises the necessity for and importance of the Strategy and the complexity of its implementation.
  • The Committee has also commended the amount of work that has been carried out to date and the identification of, and timetable for, future workstreams.
  • The Committee has also endorsed the adoption of a staged approach as being practical and pragmatic.

So in essence, the Scrutiny Committee is supporting the need for and principal thrust of the Council’s report."

"The Council is particularly mindful of the published comments of Rosemary Radcliffe CBE, who is one of Europe’s most respected economists. She has assisted the Policy Council with the development of the strategy throughout, as part of an independent working group and she has endorsed the approach taken in this latest report."

"In its response to the Committee’s letter, the Council has addressed all of the issues that the Committee has queried, many of which are matters are detail."

"The Policy Council is satisfied that its States Report, which identifies the considerable amount of work that has already been completed, provides all of the necessary information that is available at this time. It is evident from the data used that challenging targets have been set for public sector expenditure – however, the Council maintains that those targets are both necessary and achievable – providing the States and Departments play their part – something the Council is confident will happen."

The full text of the Policy Council response can be found in the Tax News Resources section.

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