GST: 5% on everything or 6% exempting food in Guernsey tax package

Tuesday, 13 January 2026 08:50

Deputies will be asked to vote in a raft of safeguards if they approve a Goods and Services Tax, which could be set at 5% on everything, or 6% if food is exempt.

Tax reform is a key States' priority, having flip flopped for years on how to get more money into government in the least unpalatable way to islanders.

GST is seen as a regressive tax because it hits the less well off harder, whereas someone working in finance, for example, may not notice the impact as much.

Policy and Resources is preparing the way for the introduction of the tax because it will take time to bring in, if that is what deputies vote for in June.

Committee vice president deputy Gavin St Pier says its preferred option is a 5% tax on everything, including all food, but there is an option of 6%, with food shopping excluded - but not meals out.

To protect those on low incomes or benefits, it is suggesting a series of measures.

These include a reduction in income tax to 15% below a wage of £32,000, a social security allowance and pensions and benefits increases.

Many opponents of GST claim it will only ever rise. To safeguard against this, P&R is suggesting it would need to be approved by 66% or more of deputies.

The wider tax review is still taking place, including possible changes on taxing businesses operating from Guernsey.

Deputy St Pier says nothing at this stage has been decided:

"Although it may be that better alternatives emerge from the Tax Review Sub-Committee, in the meantime, 60% of the net revenue raised in this tax reform package would be from sources other than local households, such as the corporate sector and those visiting the island.

Taking all the measures together in this tax reform package mean that most people earning less than £50,000 a year will be better off."