Taxes or cuts? Answers on £130 million deficit are coming…

Tuesday 14 April 2015

With the deficit in public finances expected to have swelled to £130 million, we could get our first hint about what tax rises or cuts are being proposed to fill it next week.

Treasury Minister Alan Maclean is due to speak to the Institute of Directors’ lunch on Tuesday next week – and he is expected to give the first official line on how big the black hole in public finances is, and what ministers plan to do about it.

The question of what to do about the huge hole in public finances that has mysteriously grown since last year’s election after buoyant forecasts for economic growth were proved hideously over-confident. One source who has seen the most recent data has told Bailiwick Express that a new potential deficit range of anything up to £130 million - depending on States' spending growth - has been forecast by around 2019.

Dealing with a deficit of that size would mean major changes for the States – to put it in perspective in terms of tax, it would be the equivalent of raising GST to 10% and doubling the rates of stamp duty and fuel tax. In terms of spending, it would be the equivalent of shutting down the Education and Transport departments entirely.

A week after the IoD speech, Senator Maclean will have to give an update to the States Chamber during the debate on the Strategic Plan to guide government policy for the next few years. During that debate he is also likely to be quizzed on progress by the three independent advisers who have been drafted in to give an external view on how the States can make efficiencies and cut costs – those consultants are not planning on delivering one major report, but have been making recommendations about different initiatives over the last few weeks.