P&R warns of impact if income tax rise defeated

Deputy Lyndon Trott said a temporary increase to income tax was the only way to support public services in the short and medium term

Guernsey's Chief Minister has warned that projects to extend the hospital and build more housing will be impacted if States members vote against plans to increase tax.

Policy and Resources (P&R) has put forward proposals in its budget for 2025 to temporarily increase income tax by 2p in the pound for two years.

Alongside that measure, which the treasury has estimated will raise around £34m, P&R has recommended increasing tax free allowances by £1,100.

The committee's plans face a challenge from Deputy Peter Roffey who has proposed a package of tax reforms including a 5% GST and lower income tax rates.

Trott said: "One of the most significant impacts of a budget that remained unfunded is the amount invested in infrastructure is reduced.

"The sorts of impacts will be around housing and hospitals and things around that which have materiality to our community."

He said he remained confident his committee's proposals would be successful when they are debated by States members at the meeting starting on 5 November.

Voting down the proposals to increase income tax would be a "foolish outcome" according to the P&R President, who said "he has every confidence, when push comes to shove the States will make the right decisions".

Work is underway to look at how the project to extend and improve Guernsey's Princess Elizabeth Hospital can be delivered on its original budget

'Foolish and foolhardy'

Former Vice-President of P&R Mark Helyar has put forward proposals to freeze States budgets, a strict policy of no replacements for jobs left vacant for six months, a stop to annual pay increments, and to push the States to close the public sector pension scheme to new entrants from 2026.

Trott labelled them "foolish and foolhardy".

He said there is evidence in the budget that the States of Guernsey spends less than £13,000 per capita each year on public services and in Jersey the figure is closer to £15,000.

The President of P&R said this was evidence that the island's government is well run and there isn't the need for the kind of cuts proposed by Helyar.

The budget is subject to 19 amendments, including proposals to increase the amount spent maintaining social housing.

P&R has invited the politicians proposing changes to the budget to a meeting on Friday 1 November before the budget debate to discuss the proposals.

Trott said it will then announce its formal position on each of the amendments either that afternoon or over the weekend.