Guernsey tax review: Alternative measures outlined

The Policy and Resources Committee said it was still "strongly arguing" for the original tax review policy

Three options for tax reform in Guernsey have been published by the government.

A new alternative package of measures to raise £49m to £54m and make savings of up to £16m has been outlined by the Policy and Resources Committee.

At the end of January, deputies failed to come to a decision on original proposals to raise £55m, including a 5% goods and services tax (GST).

The third option involves "cost and service reductions totalling £31m".

The committee said the States faced a projected £100m deficit in public finances.

In January there was a public protest against the introduction of a goods and services tax (GST)

A spokesperson said it would"continue to strongly argue" for the original package, called Option A.

This included 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.

The spokesperson said it was "a more progressive tax reform that reduces the burden for people on lower incomes".

Option C would require more than £31m to be cut from public services, which the committee said it was advocating against.

Option B measures

• Raising an additional £34m through social security contributions (£15m more than Option A), achieved either through increasing contributions, reducing allowances or restricting entitlement to contributory benefits, or a combination

• A 50% increase in Tax on Real Property (TRP)

• Tax on transport, which may include a form of distance charging, motor tax or paid parking

• Investigating corporate tax reforms in consultation with industry and the other Crown Dependencies to raise up to £20m

• £16m savings in public spending

Deputy Peter Ferbrache, President of the Policy and Resources Committee, said: "We've put together an Option B that we hope States Members feel they can support if they really believe they cannot vote for any package that includes a goods and services tax, no matter how progressive it is overall.

"I understand that position, given the strength of feeling we've seen from some in the community, even though I don't agree.

"Option B is a viable package that can raise enough revenue to ensure essential services, but it is a more blunt approach that does not help those on lower incomes."

He added that by choosing Option C "essential services would be severely damaged".

Analysis by John Fernandez, Political Reporter

Policy and Resources admits Plan B is imperfect, as it believes Plan A for a GST - along with measures to make sure lower earners are better off - is the best plan in front of the States.

But it doesn't include GST. Which may tempt some members of the red ribbon anti-GST campaign to support the proposals.

It also includes some elements of the Soulsby / St Pier proposals, which were rejected by the States in January - so is this enough of an olive branch?

The big question will be whether these changes will be enough to convince some States members to forget the factional alliances that have characterised this States.

Or will the States be left with Plan C, cuts which Policy and Resources admits will have a significant impact on essential services, and will be damaging to the community, especially those on lower incomes.

Or perhaps Plan D - the do-nothing approach, which seemed the only apparent compromise in January.

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