A review of taxation strategy is taking place at Guernsey States

The States has to make up a possible �45m deficit if plans to scrap corporation tax are adopted in 2008.

Social Security Minister Mary Lowe thinks it would be unfair to include contribution increases in the review.

"The right area to raise money is through the tax system rather than double taxing people," she said.

'Fiddle and fudge'

The suggestion is for the upper earnings limit on contributions to be raised from its current threshold of �34,000 to generate more money for the States.

But Deputy Lowe thinks the healthy state of Guernsey's pensions and benefits pot can only be maintained with the present level of funding.

Meanwhile Jersey's Finance President, Senator Terry Le Sueur has described Guernsey's approach as "fiddle and fudge" and thinks it may not be sustainable in the long term.

Jersey States began facing up to a similar situation a year ago when they decided to cut corporation tax to protect the finance industry.

Ministers imposed a sales tax as one of the ways of recovering the deficit.

Guernsey's proposals include increasing import duties and property rates and cutting income tax allowances and reliefs.