Are lower earners really better off? The GST calculator doesn’t prove it
I was recently asked whether the GST calculator, which cost the taxpayer £8k, is accurate.
Following a high-level analysis by someone far more intelligent and far more qualified than me, the answer appears to be a resounding no.
And, unlike the Policy & Resources Committee, the analyst has published his assumptions and calculations for all to see. Anyone can examine the workings, challenge them, and decide whether they agree with the conclusions.
P&R has done no such thing.
Instead, it continues to ask the public to accept headline claims—particularly that lower-income households will be better off—without publishing the analysis that supposedly supports them.
The omission raises more red flags in a field already full of them, especially given the committee’s consistent refusal to release the evidence it says underpins the figures in its tax policy letter.
Guernsey is being asked to support one of the biggest changes to its tax system since the Second World War. Shouldn’t Deputies therefore be allowed to examine the evidence behind P&R’s conclusions — before they vote?
A snapshot, not a forecast
The independent analysis suggests the calculator is not a forecast of what households will experience over time. It is simply a snapshot.
- Income is entered once: it does not increase.
- There is no wage growth.
- There is no general inflation.
- There is no attempt to model how household finances change in the years after—if—GST is introduced.
In other words, it answers one question and one question only: ‘What would life look like on day one?’
It does not answer the question most people actually want to know: ‘What will life look like in five or ten years?’
This matters. A lot.
The calculator includes some specific assumptions. It allows for lower fuel prices through reduced fuel duty, a 1.9% increase in pensions and benefits, and the one-off Essential Costs payment (which costs the taxpayer £1m).
But those payments are fixed. £310 stays £310. £520 stays £520. Meanwhile, a 3% GST applies year after year in an economy where prices and household spending generally rise.
The reality for renters and families
Take renters. Residential rent itself may be exempt from GST, but repairs, maintenance, building materials, professional services and many other costs are not. Over time, those costs could be reflected in higher rents.
The calculator does not model that. It also ignores the reality that most renters face: they will be forced to swallow higher rents because of the inflationary effect of GST.
Nor can it model the unexpected expenses every family faces. Boilers break. Cars need repairs. Children need school equipment. Dental bills arrive. Real life does not follow an average monthly budget.
Even the Government accepts that the final impact depends on how businesses respond and the prices they ultimately charge.
Which brings us back to the central issue.
A need for transparency
The calculator may be useful as an illustration based on one set of assumptions at a single point in time. But, based on the published analysis, it cannot by itself support sweeping claims about what households will experience in the years ahead.
If Policy & Resources has further modelling that demonstrates those long-term outcomes, it should publish it. If it has evidence that lower-income households will remain better off over time, the public deserves to see it.
That is what evidence-based policymaking looks like.
Trust is earned through transparency, not by asking people to accept conclusions without seeing the calculations behind them.
So the question is no longer whether the calculator produces an answer. The real question is: why does Policy & Resources still refuse to publish the evidence behind its claims?
Deputy Rob Curgenven
