GST could cost Guernsey more than £90m say critics

GST is necessary to reduce the island's deficit says the Policy and Resources Committee

It could cost more than £90m to introduce a goods and services tax (GST) in Guernsey say opponents.

Policy and Resources had previously estimated its plans for a new 5% goods and services tax could cost up to £42m in its first year, said Deputy Heidi Soulsby, of the Fairer Alternative group.

But she said that did not account for the impact it would have on the public sector employees’ pension fund.

The Policy and Resources Committee has said that GST is necessary to address the island’s fiscal deficit, which is projected to reach up to £80m by 2025.

Fairer Alternative said the £42m figure did not account for the effect that GST would have on the pension fund, which would require a one-off adjustment of about £50m to maintain its funding level.

They said this would bring the total forecasted range of the cost of GST to £90.7m and £92.3m within 12 months of its introduction.

"Having undertaken further analysis of the effects of GST since the last tax debate, we have discovered a significant adjustment would be required to the public sector employees’ pension fund," said Mrs Soulsby.

"Making a decision to introduce GST at a time of the continuing cost of living crisis, and persistently high inflation, remains challenging."

She said that the group would be presenting alternative proposals to raise revenue for the island, without imposing GST, which they argue would be regressive and inflationary.

The Policy and Resources Committee has been approached for comment.