GST Among Options For New Guernsey Taxes

GST could soon be introduced in Guernsey. The tax on goods and services, which is already applied in Jersey at 5% is one of three options put forward for raising revenue.

The Policy & Resources Committee has outlined three options for future taxes, one of which is a Goods & Services Tax of up to 8%.

It has described the Bailiwick's current tax base as 'unsustainable'.

Deputy Mark Helyer, P&R's lead on financial matters, say the island faces immediate and long-term financial pressures.

"It's really to cover long-term issues, in terms of pensions and elderly healthcare, and things like NICE drugs that are not currently funded. We're looking at - if we had to raise tax up to 24% of GDP, how would we do that?

"I think there was quite a lot of resistance to tax rises and I completely understand that, and I do sympathise with it. I'm in the difficult decision of being tasked with delivering a message which I don't necessarily agree with, so we shall see how it turns out in debate. But, what we are doing - I hope - is bringing real focus on to the extent to which we are falling behind what the States in the past has agreed to spend.

"We are one of the only jurisdictions in the world at the moment that don't have some form of consumption tax, and that is a hole in our tax system. We're very, very heavily reliant on income-based solutions which means the fewer people we have working or if there's some kind of economic shock, our tax take significantly suffers as a result of that."

Three possible options will be put to States members to debate in September.

Option 1 - Apply an income-based health tax at 3% and change the Social Security contribution system so that it is fairer and more progressive and use this to raise more money.

Option 2 - Apply a Goods and Services Tax (GST) that will gradually increase to up to 8% with mitigating measures to protect low-income households; - Increase the personal income tax allowance; and - Change the Social Security contribution system so that it is fairer and more progressive but without raising any more money.

Option 3 - Apply a Goods and Services Tax (GST) that will gradually increase to up to 5% with smaller mitigating measures to protect low-income households; - Make a smaller increase in the personal income tax allowance; and - Change the Social Security contribution system so that it is fairer and more progressive and use this to raise more money.