Deputies expect tax rise proposals in budget

Proposals to reform Guernsey's tax system were defeated in 2023

Politicians in Guernsey have said proposals for tax increases are on the way in 2025's budget.

It follows the revelation the States is heading for a £24m deficit this year.

Former Policy and Resources (P&R) member Deputy David Mahoney predicted proposals to increase income tax would be put forward in the 2025 budget.

Vice-president of P&R Heidi Soulsby wouldn't be drawn on whether income tax increases would form part of proposals for next year's budget.

She said: "Since P&R took office we have been monitoring the situation carefully. We know decisions have to be made.

"We've spent a lot of time in recent months trying to put a package together to stabilise our position and bring in the investment we need in the island".

During a debate on reforms to Guernsey's tax system in 2023 P&R President Lyndon Trott attempted to include a proposal to increase income tax by 3% as part of the options, but his scheme was defeated by 30 votes to 10 in the States.

A number of deputies have told the BBC they expect plans to increase income tax rates to be included as part of the budget for 2025, which is set to be published on 8 October for debate in November.

In an update to deputies on public finances Deputy Trott said it was "time to make some tough decisions".

Trott told BBC Radio Guernsey that islanders should be "under no illusions" that taxes would go up.

He said: "The amount we take from our economy is lower than any other comparable jurisdiction in the world.

"The truth - and I've been saying this for at least a decade - is the problem we have is we simply do not take enough tax to fund public services at the level this community wishes."

'Pro-business approach'

Deputy John Dyke said tax increases were "inevitable" in the budget after recent news about the poor state of public finances showed the need for the States to get "costs under control".

Dyke suggested the States should look at the number of public sector staff and the new projects being taken on, "unless the public want major tax increases".

Leader of The Guernsey Party, Deputy Simon Vermeulen said the budget would be "very interesting" and he thought it "sounded like" there would be proposals for tax increases.

He said he wanted to see a "pro-business approach", "economic growth" and "investment in infrastructure" rather than tax rises.

He suggested extending the runway would be one of the options for deputies to consider, alongside changing the way the hospital operates to make it more efficient.

New figures from the States of Guernsey showed the island's economy shrank by 2% last year.