Guernsey is currently facing a multi-million pound budget shortfall, and is planning to cut corporation tax.

Most firms surveyed did not understand the likely impact of the changes to personal income taxes on individual staff members.

The survey was commissioned for a business seminar.

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The survey by KPMG analysed some of Guernsey's leading businesses that collectively employ about 3,500 staff members in sectors including finance, law, retail, IT and manufacturing.

To maintain Guernsey's attractiveness as a place to do business, the States is considering plans for companies to pay less corporation tax from 2008.

A new "zero-ten" system means some companies would pay 0% tax, while others would be taxed at 10%.

Offshore jurisdictions such as Jersey and the Isle of Man have already decided to adopt a similar arrangement.

Ahead of the changes, employees social security contributions went up at the start of the year.

Half of the survey's respondents said that they had neither communicated these nor the beginning-of-the-year changes to social insurance to their staff members.

A majority of the firms said they did not intend to increase pay to compensate for any additional tax burden suffered by their employees.