GST to double by 2012?

The 2008 accounts for the Jersey and Guernsey States were published within a few weeks of each other, and they make for some interesting comparisons.

Jersey’s net revenue expenditure increased by 8.8% to £522 million which is about £5,700 per capita based on a population of 92,000. Our smaller northerly cousins incurred total net revenue expenditure of £297 million, increasing by less than 1%. This was just £4,800 per capita based on their population of around 62,000.

I found it quite surprising that Jersey was so much more expensive as one would expect the bigger Island to benefit from economies of scale. Even ignoring these potential benefits, if the Jersey public sector could be run at the same per capita cost as Guernsey then our 2008 expenditure would have been £442 million (92,000 x £4,800 per person) and not £522 million, which would mean not having to worry about structural deficits or the real prospect of GST going up a lot!

Of course if the Jersey & Guernsey public sectors were companies, then their shareholders would have demanded that management put egos to one side, and they would have merged long ago. ‘JerGuernsey Plc’ would by now be delivering massive synergistic benefits for their shareholders (residents!). If a full merger is out and a take over by the apparently more efficient Guernsey unlikely, then we just have to hope that some meaningful economies from inter-island cooperation will be found. It really is a ‘no brainer’.

Senator Ozouf is trying to get some kind of grip on States expenditure and is clearly meeting a lot of political resistance to his efforts. He is completely right to try and deserves the backing of his political colleagues and tax payers. After all net revenue expenditure in 1998 was £278 million and as we now know £522 million in 2008, an increase of 88% compared to RPI over the same period of 47%. All pretty frightening and, as has Chamber has been saying for many years, it just can’t go on.

If nothing can be done about the spending, then Jersey will be looking at a doubling of GST in 2012 and this will not just damage the local business community it will also really hurt our customers. Make sure your political representatives know whether you prefer radical, sensible and sustainable spending reductions or more tax – it will be too late when GST is 6% or higher!

Kevin Keen