We live in a global market and we need a sustainable and competitive taxation strategy to attract individuals and companies to the Island whilst providing the funding we need for our essential services.
The two key principles of our tax system should be:
- The Island needs to stay a low tax jurisdiction
- National services and infrastructure are paid out of national taxes – not rates.
The first of these principles means that although we are in financial difficulties, taxing everyone more isn’t the answer. It’s essential that we remain competitive on the international stage, even more so now that the UK will be looking for an additional edge post Brexit.
As part of this, we should:
- Increase the personal allowance to at least £14,000 as was promised before the 2016 budget
- Review the tax cap to make sure that it’s working for the Island, and to find ways of encouraging tax capped individuals to contribute to the local economy.
The second principle means no more “toilet tax” style charges.
Rates are an inherently unfair tax, charging people based on property size and not on their ability to pay, or on how much they use the services they are paying for.
Some services, like refuse collection and water, should really be paid for on a “per use” basis. The more you use, the more you pay.
- These changes should coincide with a complete reform of the rates system itself – which should include reduced rates for single occupancy households, or people who earn very low income.
When it comes to welfare, the whole system needs a shake-up
We have households living in fuel poverty, housing assistance that isn’t suitable for everyone, nursing care payments that don’t cover the cost of residential nursing care anywhere on Island and a public sector housing system that isn’t targeting those most in need.
On top of this the Government has reduced the Age Allowance, cut the Personal Allowance Credit and isn’t doing anything to help retain free TV licences for over 75’s. All these decisions need to be revisited as part of a complete overhaul of our welfare system.
- We should better integrate our tax and welfare systems. This would reduce the amount of form filling and red tape that can stop people getting the assistance they need.
Better sharing of information would also allow Government to be more pro-active, being able to give people advice about help that they may not even be aware of.
- We should introduce a fair system of means testing. This shouldn’t be designed to try and save money or cut costs, but instead to help identify people who may need more assistance as well as help better target our scarce resources.
- All this should be done through an Independent Tax and Welfare Commission, that would consult widely with the public and be able to recommend changes without political interference.