Politicians set to vote on postponing new tax

Proposals to delay a decision on tax reform are set to be lodged today by Deputy Jayne Ozanne, ahead of a vote on whether to scrap work on a GST.

Campaigners have argued Guernsey's projected deficit in public finances can be filled by other means, like selling off some of the States' property.

Advocates of tax reform, including actuary Martyn Dorey, have argued Guernsey has "the narrowest tax base of any jurisdiction in the world" and that Guernsey needs GST.

A vote on the proposal from Deputies Liam McKenna and Simon Vermeulen is likely to take place today, with deputies also set to decide on whether a GST should apply to food if introduced from 2028.

Guernsey's States agreed to implement a 5% GST in 2024, alongside a reduced rate of 15% income tax for earnings under £32,400, new allowances for social security contributions and higher allowances for income tax.

The treasury has argued this will mean most lower and middle earners will have more money to spend under this new package.

At 2025's general election many successful candidates argued they were either against the GST package agreed by the States, or wanted to see further work done to make it "fairer".

That led to Policy and Resources setting up a tax-review sub-committee, led by Deputy Charles Parkinson, who is currently reviewing whether more money can be taken from companies carrying out business in Guernsey.

A debate is scheduled for later this year on whether the States should adopt higher corporate taxes, the GST package, a mixture of both or something else entirely.

Deputies Haley Camp and Mark Helyar have proposed halting all work on "territorial corporate tax", which is a strand of the project Deputy Parkinson is working on at the moment.

Dorey, who has worked with the States on tax policy modelling, said ahead of this week's debate: "Most people in Guernsey will actually be taking home more money after tax with the GST package."

He argued that while "GST is super unpopular" it was not the jobs of politicians to only do the popular thing: "Being a politician isn't about doing exactly what people want, it's about making decisions in Guernsey's long-term interest.

"If Guernsey rejects GST, an under-resourced government actually hampers economic growth.

"Too much tax is a bad thing, but under-taxing is a bad thing too because then the government isn't resourced."

Some charities and businesses have urged deputies to approve the proposal from McKenna and Vermeulen to take GST off the table for this political term.

Clinton Millard, director of Millard & Co bike shop in Victoria Road, said: "It will be a lot of admin for smaller businesses like ours, and I can't imagine it will be done smoothly."

Officials have estimated the GST package will raise about £50m a year and the administration cost was estimated at £2.4m, with responsibilities divided between the Revenue Service and the Bailiwick of Guernsey Customs and Immigration Service.

The annual administration of GST is estimated at £1m with the president of Policy and Resources stating there would be a specific team focussed on the collection of GST.

Millard said: "GST will just lead to inflation on the island, we're going to have to pass that on to the customer."

Pensions and benefits are set to be increased in line with a higher rate of inflation, which is expected after the introduction of a GST.

Millard said: "We'll need to account for the increased tax and the increased pay we'll need to give our staff, so that will further increase prices."

"There isn't a whole lot of wiggle room."

Down the road at the Mill Street Community Café, director David Savident agreed with many of the points raised by Clinton.

"If we have GST on top, it's going to push our prices up. Our finances are tight.

"It makes me feel a bit dispirited, we're trying our hardest for the third sector and government is putting more to hinder us."

"We survive on our own initiative, yet the States is pouring more costs on us."

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