Income tax reduced for those earning less than £90,000

Politicians approved proposals including increased funding to its health services and freezing increase in property tax for smaller properties

Income tax allowances in Guernsey will increase by 7% for those earning less than £90,000, the States has confirmed.

As part of its 2023 budget, those earning below the threshold will have their tax allowance increase by £850, making £13,025 of earnings tax free.

Approved changes would be funded through increases to the tax on cigarettes, alcohol and petrol.

Policy and Resources Treasury Lead, Deputy Mark Helyar, said: "This will be the last budget of its kind.

"We cannot squeeze any more pips from the current system," he said.

Proposals to give corporate tax breaks for cannabis companies in Guernsey for the next five years and to increase domestic property tax by a flat rate of 8% were rejected.

Deputy David De Lisle argued that the increase of Tax on Real Property (TRP) for larger properties of 20% was "unfair" and the "load needed to be spread wider."

The government approved to freeze the increase in property tax for owners of smaller houses, with a TRP of less than 200.

An increased £48m spending in health services and plans to encourage greater co-operation between Jersey and Guernsey's States were approved by the States.

A proposal to look at how income tax incentives can be used to encourage more first time buyer properties to be built and to encourage more people to let out their spare rooms were also approved.

Policy and Resources, which compiles the budget, will report its proposals by March 2023 as to how tax-free allowances and benefits could encourage islanders to let out their spare rooms to alleviate housing problems.

Mr Helyar said the timeline of March 2023 may be "difficult with current resources."

Political analysis by BBC Guernsey political reporter John Fernandez

"This will be the last budget of its kind".

Tinkering with the tax on a pint and petrol is not enough for the financial challenges on the horizon, according to Policy and Resources.

In 2023, States members will be faced with a choice: increase taxes, possibly by introducing a GST or prepare yourself for spending cuts in 2024.

Because whilst budgets are swelling this term, it has become obvious to all within the States that these kind of increases cannot continue.

The message from Policy and Resources is: don't come to next year's tax debate saying we should cut spending - come with firm proposals for action to address the deficit, or see your committee's budgets suffer the consequences.

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