Guernsey: Spending cuts plan proposed as alternative to tax

The new tax would apply to most goods and services on the island

A plan to curb spending will avoid the need to introduce a new tax on Guernsey, a deputy has said.

Proposals for a 5% goods and services tax (GST), as well as changes to social security and income tax to reduce a budget deficit, are due to be debated later in January.

A tax review in November found GST was needed to fund services.

Deputy Heidi Soulsby said her amendment was a "credible and fairer" way to cut the budget deficit more than £62m.

She said there were other ways to bridge the funding gap, including cutting costs in the government, which she labelled as "spendthrift".

"There is never a good time to introduce GST, but doing so when inflation is at a 40-year high and wage rises have not kept pace with price increases is really, really bad timing," she said.

"More importantly, the case for GST has not yet been made and the alternative proposals demonstrate that a different approach is possible, focusing on spending restraint and completion of a corporate tax review."

'Spendthrift'

She said the "first thing that needs to be done" was a "comprehensive review that establishes the role and size of government", as the present States was "the most spendthrift of the three I've served in when it comes to spending".

"Without fail, it chooses the most expensive model for everything," she said.

Deputy Soulsby's proposal, which was seconded by Deputy Gavin St Pier, outlines a number of measures to curb spending, including:

• Reducing spending of 1% in 2024 and 2025 to save £9m

• Forming special purpose committees to review the role and size of government, services and spending, and review corporate tax

• Reforming social security contributions

• Accelerating the withdrawal of allowances from high earners

• Introducing charges on business parking and cruise ship emissions

GST is being considered amid a predicted £85m shortfall in funding for services as the population of the island gets older.

The decision on the initial proposals, which sparked protests in 2022, is due to be made at the States meeting which begins on 25 January.

Analysis - John Fernandez, Political Reporter

The well-trodden battle lines of the last six years of this States are once again being laid out, as once again, it's Ferbrache versus St Pier.

The difficulty in predicting the winner in this skirmish though is that the troops are scattered.

Ferbrache's lieutenant, Deputy Carl Meerverd, is already on manoeuvres against policy and resources plans for GST, while Deputy Peter Roffey is one of those leading the charge towards GST.

The Soulsby/St Pier solution will be decried as more can-kicking and too little too late with the debate fast approaching.

But, with it offering a route to the next election without introducing a GST, there are some deputies who have often lined up against the two proposers, who will instead be taking up arms to back their plan when the debate comes around.

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