Tobacco, alcohol and fuel duties in Guernsey to rise above inflation

A packet of 20 cigarettes will cost 47p more, while a pint of beer will rise by 2p

Tax on tobacco, alcohol, fuel and property is set to rise above inflation in 2022, according to the latest States of Guernsey budget.

Tobacco duty will rise by 7.5%, while Tax on Real Property (TRP) and alcohol and fuel duties will rise by 4% - above a 2.5% anticipated inflation rate.

The 2022 budget revealed tax revenue generated in 2021 was £46m higher than previously anticipated at £508m.

The tax-free personal allowance is set to be increased with inflation by £300.

This 2.5% increase means people will be able to earn £12,175 a year before the island's 20% income tax kicks in.

With the duty increases, people can expect to pay around 47p more for a packet of 20 cigarettes, 2p extra for a pint of beer and 3p for a litre of fuel.

The increases are expected to raise around £1m.

The States said the budget showed there had been a "strong economic bounceback" from the coronavirus pandemic, with a £22m surplus expected in 2022.

'A necessary budget'

However, overall expenditure in 2021 was also £15m higher than predicted at £513m, leading to a deficit of £5m.

Original projections estimated the deficit to be in the region of £22m this year.

Losses for states-owned airline Aurigny are expected to be £16m - £2m higher than anticipated - and £12m was spent on funding losses for Ports of Guernsey from the impact of the pandemic.

The overall economy in 2020 is now believed to have shrunk by less than 5% overall, a contraction which has been reversed this year, the States said.

Deputy Peter Ferbrache, president of Policy and Resources said: "Of course any tax increase people will naturally be concerned, but it's a stepping stone to where we need to get to.

"It's a necessary budget and is as modest as we thought we could make it."

Deputy Mark Helyar, treasury lead for Policy and Resources added: "It's very difficult at the moment with the current economic constraints. We have a very limited basket of which we can grow taxation."

The budget is due to be debated on 2 November.

Analysis: John Fernandez, BBC Guernsey political reporter

Quiet - that's how 2022's budget is being described by Guernsey's top politician.

It does seldom little to help low and middle earners, which the island's treasury lead has admitted.

But with the big fiscal levers up for discussion next week as part of the tax review, what did we expect?

There was never going to be a rabbit out of a hat moment - but instead more of the same.

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