Guernsey committee to present three tax reform options

The Policy & Resources Committee say the States face a projected £100m deficit in public finances because of changing demographics

Guernsey's Policy and Resources (P&R) Committee is set to present three options for tax reform in the island.

At the end of January, deputies failed to come to a decision on a future tax policy.

One option will focus on previous plans for higher income tax allowances, social security contribution reforms and a 5% goods and services tax (GST).

The BBC understands the other two options will involve a mix of tax rises and cuts to public spending.

P&R has said the States faces a projected £100m deficit in public finances because of changing demographics.

It proposed a scheme which would have seen a 5% GST introduced before the General Election in 2025.

Alongside it, there were proposals for a new 15% rate of income tax on earnings under £30,000, a £600 increase in income tax allowances and a reform of social security contributions.

Plans to cut spending, review government business and introduce new taxes on cruise ship emissions and business parking were rejected by deputies.

Proposals to get more money from companies through a new 10% rate of corporate tax on profits made by businesses locally were also rejected.

Former Treasury Minister Charles Parkinson who proposed the changes to corporate tax said he was "unlikely" to support any of these new options.

He said he wants the States to "focus on growth and reforming corporate tax."

P&R plans should be published before Wednesday.

Analysis by John Fernandez, BBC Guernsey Political Reporter

Guernsey's States is staring at the very real possibility that the big challenge it is facing will not be answered this term.

GST is dead on arrival.

And we're told by Policy and Resources it's the only revenue-raising mechanism which can raise the amount of money needed to face the problems ahead.

There appears to be little appetite for big corporate tax reform, as indicated by the vote on Deputy Charles Parkinson's plans.

So the only option left is spending cuts, described as "slashing and burning" through public services.

But with each committee fiercely protective of its own budgets, how these will be delivered is unclear.

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