Motor tax

At its States Meeting to be held this week, the States are to consider a proposal to proceed with investigation of a ‘distance charging mechanism’ for motor vehicles on Guernsey’s roads.

In our survey, which concluded on Monday, 2020 members voted overwhelmingly (41%) to develop a holistic approach to energy, transport and revenue (which was the suggestion of the 2020 Association) whereas only 13% wanted the P&R preferred choice to investigate a distance charging mechanism. Results were as follows:

After consideration of the policy letter entitled ‘Taxation of Motoring’ dated 23rd May, 2019 States Members are asked to decide: “To agree, in principle, that a distance charging mechanism should be introduced as soon as possible and direct the Policy & Resources Committee to report back to the States with detailed proposals to introduce a distance charging mechanism.” Our members say ‘NO’, overwhelmingly.

Briefing Note 7

Given the foregoing, the obvious immediate & logical solution appears to be to retain the existing fuel duty arrangements (26% of votes), and probably adjust this to retain revenue level (21% votes).


Briefing Note 7

The briefing note below is the latest in our series summarising prospective business at States Meetings, to enable 2020 Association Members to be informed. 

(We did not present a briefing note on the recent interpolated States Meeting of 25th June. The business of this Meeting was to present and discuss (and accept) the annual report on the Policy and Resources plan and (newly and with commendable transparency) the States Annual Accounts, which had already been signed off. Owing to the shortness of time after the meeting of 12th June, and the complexity of the agenda for this Meeting as it developed, with over 20 amendments being proposed for discussion, we were unable, regrettably, to provide a meaningful briefing in the time available. Members will hopefully have been able to follow the account of the debates in the Guernsey Press.) Of note was the Inder/Soulsby amendment requiring regular progress reports of the Future Digital Services project for which the States gave the go-ahead, at an estimated £200M worth of expenditure over 10 years, at its Meeting of 12th June. Members will recall that we had grave concerns over the lack of detail in the Policy document laid before the States on the 12th June, and this amendment should to some extent address these concerns.

Future States Business brief (7) – Meeting of 17 July 2019

The business for this meeting returns to the usual general format. The routine matters which are effectively to be ratified unless some objection is raised include measures relating to the introduction of a Highway Code and particular forms of traffic signs in Guernsey, relaxation of the Misuse of Drugs legislation to permit the controlled use of medicinal cannabis, some (very dry) adjustments to Data Protection regulations and the laying down certain forms and procedures with regard to mental health treatments. There is also a proposed law being laid before the States in order to enable the seamless transfer of employment of IT personnel from the States to the new entity which is now going to take forward the all-embracing Future Digital Services project.

There are three noteworthy items for debate. The first concerns “taxation of motoring” and is a proposal to change the present system of a motor fuel excise duty (petrol and diesel) to one of taxing based on mileage. This is apparently driven by concerns about falling revenue, owing to fossil fuel consumption falling. The proposal is to investigate potential systems and bring forward proposals for changing fuel duty to a mileage tax. The grounds are that continuing to raise the (necessary) revenue – some £20M annually – through increasing fuel duty is unfair on those who cannot afford to change their vehicles to electric ones, but that it is still assumed that a flat rate annual tax on vehicle ownership is objectionable, on the grounds that “road tax” should be paid by actual users. A tax on mileage is seen as the most “fair” way forward. The 2020 Association is of the view that the proposition is too narrow and needs to be part of a holistic approach to energy, transport and revenue thereon, and in the interim the current fuel duty rate could simply be increased to retain current revenue.

The supporting materials contain interesting comparisons on the costs of motoring in the UK itself, and in the various Crown Dependencies. Looking at the wider picture, though, the proposals illustrate the common taxation dilemma of the conflict between trying to raise revenue by taxing an activity which people wish to enjoy, but at the same time wanting to minimise the harmful effects of their doing so (compare alcohol and tobacco taxes). Guernsey needs tax revenues, but at the same time it surely wants to discourage, not only the use of fossil fuels, because of pollution and greenhouse gas effects, but reduce the very use of private cars generally, because of traffic congestion and health effects. These proposals seem to be aimed only at trying to tweak the system to produce a supposedly “fairer” way of retaining current revenue in the relatively short term. Given the sensitivities of motoring as a political subject, the debate on this topic should be interesting.

The second notable item is a general review of intentions with regard to International Development Aid. The proposal advanced is to fix a target of 0.2% of Guernsey’s GDP to be given out in overseas aid by 2030, but in the meantime also whilst spending is below that target, to allocate a proportion of any budget surpluses achieved, in addition to budgeted overseas aid in that year. 

Overseas aid is, again, a sensitive subject on which opinions vary greatly. No-one can decry or denigrate charitable giving, but there are good reasons for keeping governmental charitable giving well restrained. First, there is a huge private charitable ethos in Guernsey already. This is to be encouraged, for its fostering of good works and communal spirit, but the important thing is that it is voluntary. Quite apart from people reasonably wishing to be in control of where they give away their own money, rather than having its direction foist upon them, if the States starts making greater aid donations out of taxation, this is all too likely to lead individuals to reduce their own charitable involvement. Next, the adage that “charity begins at home” is a forceful one. The States is elected to improve the well-being of the people of Guernsey, not the people of other lands, and there are many deserving causes for States’ bounty to be found in Guernsey itself. Third, the States are, in effect, trustees of taxpayers’ money, and the justification for handing out trust money other than to the beneficiaries of the trust can only ever be that there is some demonstrable and actual indirect benefit to the beneficiaries from doing so. Where the only suggested such benefit is enhancing the “reputation” of Guernsey, this owes more to rhetoric than to any evidence of tangible effects. Fourth, but particularly important, there is the further very forceful adage that it should be “trade not aid”. 

The proposed target is, in fact, the lowest of the suggested possible targets as a percentage of GDP (up to 0.7%) put forward in a previous States resolution of November 2018, but there is the question whether even this lowest of percentages is really appropriate for the finances of such a small economy as Guernsey. It is interesting that 0.7% of GDP is £21.35m, which is oddly about the same amount of fuel duty that the first proposal above is trying to replace. (Figure based on the latest available GDP of £3.05bn in 2017). We, of course, have no responsibility to “lead by example” in this international field, and it must be highly questionable whether Guernsey’s population gains anything by doing so, even if it may satisfy the personal consciences of some Deputies. It smacks of ‘virtue signalling’ with other people’s money. Once again, the debate on this topic will be interesting.

The third matter of major interest is a Requete which has been raised in relation to the Island Development Plan, to enable policy adjustments to be made before the end of its present term of application. In particular, this wishes to stress the importance of considering the combined impact of multiple small development schemes, preferring brownfield sites over greenfield sites, promoting the development of the Bridge area, and making it easier for third parties to object to planning decisions which affect them. After the well-publicised recent outcry against certain planning decisions, and the approach and procedures applied, this is not at all surprising, and is probably to be welcomed.

Other matters to be dealt with include elections to the Guernsey Competition and Regulatory Authority, to the Monitoring Board of the Prison and to fill vacancies on the Committee for Home Affairs. The annual report on Guernsey Prison is also presented to the States for consideration.

(Further information regarding future States Business can be found on under “Search States Meetings Information.”)