GST plan proposed as alternative to tax rise

In 2023 about 2,500 people protested in St Peter Port against the introduction of a GST

Plans to introduce a 5% goods and services tax (GST) are set to return to the States.

Former member of the tax review panel Deputy Peter Roffey has set out proposals similar to the GST package rejected by States members last year.

He said the proposals to increase income tax by 2p in the pound would make the islands uncompetitive compared to Jersey and he wanted to change the plans.

Policy & Resources (P&R) President Lyndon Trott previously said in Guernsey there are two ways to raise more money, one is consumption taxes and the other taxes on income, and as the States had rejected GST, he was putting forward higher taxes on income.

More money

Roffey has put forward plans for a 5% GST alongside a new lower rate of income tax for earnings below £30,000 and reforms to social security contributions in an effort to mitigate the regressive impact of a GST, alongside changes to corporate tax rates for big businesses.

A similar package of tax reform measures was rejected by deputies in October 2023.

It led to a successful motion of no confidence in P&R, which at the time was led by Deputy Peter Ferbrache.

Roffey said he was glad P&R had recognised more money had to be raised, but that he was not sure it was the "fairest or most effective" way to raise more income.

He argued this would make middle earners worse off, and said the package he had put forward would have far less of an impact on middle earners.

"I will offer an alternative, so people can vote for both if they want to go for lots of tax increases, but I do hope this States can coalesce around some kind of tax rises.

"We really have to do something about this."

Price of a pint

The new P&R led by Deputy Trott has proposed a temporary two-year increase to income tax of 2p for every pound, alongside an increase to personal income tax allowances of £1,100 to protect low earners.

P&R has said its 2025 budget would encourage economic growth by raising money for spending on projects like a new Victor Hugo Centre and air and sea links, whilst also addressing the current deficit in public finances.

It has also proposed a freeze to the tax on the price of a pint, tax breaks for landlords and changes to document duty rates.

Deputy Mark Helyar has suggested keeping committee budgets at the same level, meaning savings of about 3% would have to be made

Former vice-president of P&R Mark Helyar has also put forward an amendment to the 2025 budget.

He has asked States members to back proposals to stop any increases to committee budgets, meaning they would need to save about 3.2% on their budget next year, because of inflation.

Helyar labelled P&R's budget a "disaster" for the economy.

He said: "It's going to harm the economy, this makes the tax base even thinner and is on the same group of people, it's the wrong thing to do.

"It won't be temporary too, two years from now the States will be facing a bigger deficit.

"The public don't want to see tax raises until it sees something sensible on savings and cuts and it hasn't seen that."

P&R has been approached for comment.

The 2025 budget includes no central savings target, but has recommended moving forward on plans from its savings sub-committee to digitise some billing services and look at grants from Education, Sport and Culture, amongst other measures to save the States money.

These proposals will be debated at the States meeting starting on the 5 November.