Former UK minister criticises Guernsey goods and services tax plan

Lord Digby Jones said he did not agree with the introduction of a GST

A former UK trade minister is urging Guernsey's States to change plans for a goods and services tax (GST).

Lord Digby Jones, who also chairs the Guernsey Policy and Economic Group, said he was "pleased" the projected £100m deficit in public finances was being addressed with a GST.

But he said he "doesn't agree with how it's being done".

And he described a planned new lower 15% rate of income tax alongside a GST as a "bribe."

Lord Jones said: "Politicians have acknowledged the issue, they can't kick the can down the fiscal road any more which is also a good thing.

"My problem is that they are saying 'Let's introduce a tax on consumption, but this is inflationary and will hurt the poor more, so let's bribe them with some of their own money'."

He also suggested scrapping zero-10, the tax system introduced in 2008 which means some companies pay no corporation tax and others pay 10%.

Policy and Resources has proposed a package of measures which includes:

• A 5% Goods and Services Tax

• 15% income tax rate up to £30,000

• New allowances for social security contributions

• £600 increase to income tax allowances

• Pre-emptive increases to pensions and benefits to anticipate the impact of inflation

Policy and Resources President, Deputy Peter Ferbrache, said he did not believe Lord Jones's alternative of a tiered income tax system with a higher rate of 22% on income above £50,000, rising to 25% for higher incomes, would raise the money needed.

He said: "Having a higher rate of income tax than your competitors is a disadvantage, potentially a crippling one where many would dismiss Guernsey at a mere glance."

Mr Ferbrache said he believed any corporate tax changes needed to be in consultation with the other Crown Dependencies.

Deputies will debate changes to the island's tax system in January.

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