Tax rises are proposed in Guernsey's 2011 budget

Taxes on tobacco, petrol, alcohol and property will rise if the proposed budget for 2011 is agreed by the States of Guernsey.

The Treasury and Resources Department said the indirect taxation increases would generate about £3.5m.

Minister Charles Parkinson said it may be seen as "conservative", but the aim was to achieve a balanced budget.

He said in the past year the estimated budget shortfall had decreased by £7m to £35m due to unspent balances.

Deputy Parkinson said the increases combined with a real terms freeze on States spending would hopefully eliminate the deficit in the future.

He said: "All departments have begun to accept the need to restrain States expenditure.

"Restraint will have to be maintained despite the inevitable... demands on existing services and the introduction of new services."

Deputy Parkinson said the Guernsey economy had proved resilient during the global crisis and economic conditions appeared to be improving, but admitted "the economy is still quite fragile".

He said the risks to Guernsey included the possibility of a double dip recession in the UK or United States and the burden of global debt suppressing investment growth.

The rises on tobacco, petrol and alcohol take immediate effect with the tax on real property due to increase from 1 January.

The proposals are due to be debated by the States on 8 December.