Guernsey urged to scrap 'unfair' tax cap

The Policy and Resources Committee said scrapping the limit would reduce Guernsey's income in the long-term

Proposals to abolish the cap on how much tax high earners in Guernsey pay on their income are set to be published.

Under the current law, people can pay a maximum of £300,000 in tax on their income, equivalent to earnings over £1.5m per year.

Deputies Chris Le Tissier and David De Lisle have lodged an amendment to the 2024 budget to remove the tax cap.

Guernsey’s Policy and Resources Committee has labelled the proposal “irresponsible”, warning it would be a “major disincentive to newcomers with income of this level”.

Income warning

Mr Le Tissier said: "The system of allowing the super wealthy to pay a capped, lower than 20% rate of tax is deeply unfair and discriminates against the vast majority of other Guernsey taxpayers.

"Out of our 65,000 residents, approximately 30 individuals benefit from our generosity.

"I, and everyone I have spoken to, do not believe any of the 30 residents will leave as there are many, many other benefits to the super-wealthy in living in our wonderful island."

The Policy and Resources Committee is urging Mr Le Tissier to withdraw his amendment.

Chris Le Tissier: No risk to rich leaving Guernsey

It said: “If Deputy Le Tissier is suggesting doubling, or even removing all tax caps with no consultation, it would be an extremely irresponsible amendment to any budget, and one that would only serve to reduce our income in the long-term and put more pressure on the average taxpayer."

It said people with income from non-Guernsey sources of at least £750,000, or £1.5m on their worldwide income, can elect to pay the capped amount of tax.

The 2024 budget proposed increasing the non-local income cap to £160,000 and the worldwide cap to £320,000.

"This is already higher than some of our key competitor jurisdictions," it said.

"The small number of Guernsey residents for whom these caps apply choose to be tax resident here, and contribute a very significant amount of tax to fund local services, but they can choose to be resident elsewhere.

"It would also be a major disincentive to newcomers with income of this level.

"Ultimately, that would only serve to reduce the States’ revenues and put more pressure on the rest of the taxpaying public.

"One person paying tax at the current worldwide cap level is roughly equivalent to the amount paid by 55 taxpayers on median earnings."

The 2024 budget has also proposed new taxes on unoccupied properties and derelict glasshouses, which could see the owners pay five times the standard rate of property tax.

The committee has also put forward plans to increase income tax allowances by £875 to £13,900.