Scrap zero-10 system before new Guernsey tax, ex-minister says

Deputy Charles Parkinson wants a "sensible" corporate tax system before a GST is introduced

A former Treasury minister has criticised a proposal to introduce a goods and services tax (GST) in Guernsey before overhauling the corporate tax system.

Deputy Charles Parkinson wants the States to scrap the zero-10 tax regime before imposing a GST.

The system means some companies pay no corporation tax while others pay 10%.

In November, the Policy and Resources Committee proposed a GST of 5% to plug a hole in the island's finances.

The States said zero-10 was introduced to make Guernsey "competitive with other jurisdictions" and many changes had been made since to "offset its consequences".

But Mr Parkinson said introducing a "sensible" corporate tax system should be a priority.

Under the GST proposal, middle income islanders would pay an estimated £1,100 every year, according to a tax review.

The GST would apply to most goods and services

"The island went down a cul-de-sac when it introduced zero-10 - it exempted whole swathes of businesses on Guernsey which should be paying tax on Guernsey," Mr Parkinson said.

"As a result huge amounts of the costs of the States have been transferred to you and me - the general public.

"Tax on the individual populations have gone up and up and up... because many companies are not paying tax here and should be paying tax here.

"Until we sort that out there's no point in looking at any other taxes."

He dismissed fears that scrapping zero-10 could force businesses to leave the island.

"The businesses I want to tax are the businesses in our domestic economy," he said.

"If you're a garage in Guernsey, you can't go anywhere else - you can't service Guernsey cars from the Isle of Man."

The tax review shows that introducing a broad-based GST would bring Guernsey "closer to international norms".

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