P&R proposes income tax rise and tax reform

Deputy Lyndon Trott said the only immediate way of raising significant money for the States was a temporary income tax increase

Guernsey's top politicians are set to propose a temporary 2p in every £1 increase to income tax, alongside wider tax reforms including a goods and services tax (GST).

Policy and Resources (P&R) said the plan would "deliver a short-term cash injection".

The deputy behind plans for a GST, Peter Roffey, said the new package ensured the income tax increase would only be for two years "before the wider tax package kicks in".

While P&R President Lyndon Trott suggested the new proposal would give deputies an opportunity to "stabilise public finances".

Challenges

The new package still faces challenges from other politicians, with Deputies Charles Parkinson and Liam McKenna having proposed a scheme to increase corporate tax.

While former Deputy Chief Minister Mark Helyar has put forward a proposal to freeze the States budget.

Privately some deputies have suggested none of the options for tax reform will receive majority support by deputies.

Proposals to introduce a GST, alongside a lower rate of income tax for earnings under £30,000 and a reform of social security contributions were defeated in 2023 by 25 votes to 15.

Trott's attempt to increase income tax only received 10 votes when it was debated in 2023.

Deputy Peter Roffey said he was reluctant to support an increase to income tax

In laying this new amendment to the 2025 budget, Trott said he recognised there were deputies "who want to deal now with the long-term sustainability of public finances".

Roffey, the Employment and Social Security President, admitted he was initially reluctant to support plans for an increase to income tax.

But he said: "At least this package ensures it would be for two years only before the wider tax package kicks in.

"It will not be easy for me to support income tax increases given my well-publicised comments but it is sometimes crucial to make significant compromises within our consensus style of government."