Guernsey States 2013 accounts: Deficit up to £24.8m

Deputy Gavin St Pier said falling revenues showed the need to review the island's tax system

More needs to done to balance the States' books, Guernsey's treasury minister said as the States deficit rose by nearly £5m.

Income fell during 2013 and the overall deficit reached £24.8m, up £4.8m compared with 2012.

Deputy Gavin St Pier said: "We do need to stay focused on closing the deficit and we have concerns over the sustainability of our revenue."

He said a review of personal tax, pensions and benefits was needed.

Deputy St Pier said: "Our deficit position in 2013 is largely as a result of the deterioration in revenues.

"Eighty percent of our income taxes come from individuals and 78% of general revenue comes from income tax."

A five-year saving programme aimed at cutting £31m from annual spending, which will not be achieved, is due to finish at the end of this year.

In 2013 the States spent £24.8m more than it earned, with the difference funded from reserves

The deficit began in 2008 due to the introduction of a zero-10 corporation tax.

Under that system most corporations in Guernsey paid no tax, while others pay 10% and a small number pay 20%. Previously all companies paid about 6%.

In 2013, the tax rate for insurance and fiduciary businesses was increased from 0% to 10%.

That increased taxes from £40.3m in 2012 to £44.1m, but was £6.4m short of what was expected.

There was a fall in individual tax by £400,000 to £227.1m and other taxes - property tax, company fees, document duty, excise and import duties - fell by £1.3m to £76.1m.

Document duty, paid when properties are sold, decreased by £1.6m to £15.5m, due to a 9% fall in annual sales.