From D Waters.
THE new year has only just begun and demands on the States coffers are being made: redundancy payments for Woolworths staff, many of whom have already been offered alternative employment; compensation for investors in failing banks in Guernsey and the Isle of Man, where banks have had problems before. It is obvious where the recent unpublished report into welfare is going to go.
The dependency culture has been the undoing of many countries in the West. Travellers on low-cost airlines ask where their government is when they are stranded when the airline goes bust. Any accident immediately gives rise to the question as from whom compensation may be claimed.
Many families now depend on welfare. The savings ethic has virtually disappeared. The original old-age pension was intended to bring people up to the poverty level, not provide for their entire needs. The lack of savings will haunt the working population of today when they retire. The responsibility for an individual rests primarily with him.
It is not the purpose of central government to act as insurer of last resort or to provide cover for all the ups and downs of life whether the losses are caused by bad fortune, accident, stupidity or ignorance.
It is there, inter alia, to provide a safety net for the least well off in our society who cannot help themselves. A case can be made for all sorts of hard-done-by groups. An obvious example is the responsible pensioners who have saved all their lives, only to see their income cut to ribbons by falling interest rates and government ineptitude.
Income Tax is paid by a small number of corporate taxpayers and a small proportion of individual residents. If they lose confidence in the States’ ability to control expenditure, the corporates will move their offices; the wealthy taxpayers will emigrate and tax mitigation planning will flourish.
The States’ finances are far from bottomless. If International Financial Reporting Standards were applied to all the States’ liabilities, particularly pensions, there would be no rainy day fund. Interest rate falls mean lower incomes and lower taxes; the credit crunch will also lead to lower profits and thus lower tax revenue and thus further pressure.
We need the States to stand firm.
Green Lanes,
Pont au Bré,
St Peter.
