Business heads say income tax an 'inadequate tool'

The finance sector accounts of 17% of the island's workforce, says Guernsey International Business Association

Income tax in Guernsey is an "inadequate tool" for raising revenue and taxation should be broadened, business leaders say.

A combination of taxes on consumption, empty properties, maritime fuel, motor cars, or the removal of mortgage tax relief on investment properties, should all be considered, said the Guernsey International Business Association (GIBA).

The comment follow a proposal from the island's Policy and Resources (P&R) Committee for a temporary 2p in the pound increase to income tax as the main measure of its budget for 2025.

The States of Guernsey has been approached for comment.

Civil service increase

"Income tax does not capture revenue from wealth that remains untaxed under the current system," said the GIBA.

The association said it would like the States to attempt to rebalance the island's sources of tax revenue "in line with other jurisdictions, such as Jersey and isle of Man".

"Raising personal income tax alone, while aimed at securing financial stability, is unlikely to provide a sustainable solution for the escalating costs of essential services, particularly long-term healthcare, housing and education," it said.

"Income tax is an inadequate tool, not only because it is a tax on working people, but because the pool of working people in our primary revenue generating sector - the finance industry - is reducing.

"The finance sector today accounts for 17% of the workforce.

"Furthermore, the civil service has increased by around 400 new civil servants in the same period.

"The government is now the largest employer, representing 18% of the workforce."