P.2022/112 Proposition 3 - OPTION B (As inserted by Amdt 14)
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II
Committee
Policy & Resources Committee
Proposition
OR IF PROPOSTION 2 IS NOT APPROVED
3) POLICY & RESOURCES’ OPTION B
To agree a package of revenue raising and cost reduction measures which will close the deficit by £80-90million in total through:
A) A series of measures to raise additional revenues through:
a. A restructure of the Social Security Contributions system similar to that outlined in section 8, including that all contributors be entitled to an allowance and liable for contributions on all income regardless of source, save it should raise £34m in total through one of or a combination of (i) the application of higher contribution rates; (ii) by setting the allowance lower than the personal income tax allowance; (iii) reducing the range or
restricting entitlement to contributory benefits, and directing the Committee for Employment & Social Security to report back with firm proposals in its
Contributory Benefits and Contribution Rates for 2024 report in October 2023;
b. Directing the Policy & Resources Committee to develop proposals for raising up to £20m further revenues from the corporate sector without unduly negatively impacting Guernsey’s competitive position or compliance with international standards, through engagement with industry and the other Crown Dependencies, which should be presented to the States for consideration no later than November 2023. This work to include examination of all the options set out in Appendix 3 plus an alternative corporate vehicle or other appropriate form of entity or taxing structure which will be subject to income tax at 15% or such other rate or basis as the review may determine;
c. Agreeing that all rates of domestic TRP should be increased by 50% in real terms over the five-year period 2024-2028 and directing the Policy & Resources Committee to include proposals in the States of Guernsey Annual Budgets for that period including examining the implementation of a deferral scheme for those on fixed incomes;
d. Directing the Policy & Resources Committee, working with the Committee for the Environment & Infrastructure, to develop proposals for increasing the revenues generated through transport by £10-15m above 2022 levels, such work to include consideration of distance charging, the application of an annual tax on the ownership of vehicles and paid public parking, and the bringing of proposals to the States by March 2024; and noting that the Policy & Resources Committee will bring proposals as part of the States of Guernsey Annual Budget for 2024 in relation to TRP on corporate parking; and
e. Including, within the States of Guernsey Annual Budget for 2024, a proposed policy to underpin any future changes in the threshold for the withdrawal of personal allowances.
B) To agree that, while increasing revenues, it is essential to control expenditure and deliver savings; and accordingly direct the Policy & Resources Committee to:
a. Prepare the States of Guernsey Annual Budget for 2024 to include no real- terms growth in revenue expenditure, excepting the budget of the Committee for Health & Social Care;
b. Establish a Sub-Committee to identify and review essential community services and, working with all Principal Committees and wider States Members, consider where efficiencies, structural change, cessation, outsourcing, restricting access to and/or commissioning of those services could deliver significant savings, and to incorporate these into a medium- term plan for delivering overall cost reductions of at least £10-16m over five years to be considered by the States no later than July 2024 for incorporation into the States of Guernsey Annual Budget for 2025;
c. Review the Capital Portfolio and pipeline in light of the outcome of the debate and report back to the States by September 2023 with recommendations for (i) any changes to scope or funding of the existing portfolio; and (ii) whether the assumption for the level of capital expenditure contained within Principle 6 of the Fiscal Policy Framework should be amended; and
d. Include proposals with the Government Work Plan 2023 to reprioritise initiatives for which funding has not yet been released to the extent necessary to limit the additional expenditure to deliver these initiatives over the remainder of this term to a maximum of £5.7m, being 1% of the 2023
General Revenue budget.
C) To note the lack of certainty regarding the deliverability of these proposals and therefore to direct the Policy & Resources Committee to monitor progress and impact on the deficit and report back, if required, by December 2024 to set out any further measures necessary to address the sustainability of the financial position.
