GST opponents admit P&R has the votes to succeed

Opponents of a tax package have admitted defeat ahead of a final vote in the States of Guernsey that could come as early as this evening.

Policy and Resources' (P&R) plans involve a 3% GST, lower income tax rates, social security contribution allowances, the re-introduction of motor tax, higher taxes on companies, higher income tax allowances and government savings.

Deputy Garry Collins, who has led a number of proposals to change the package, said: "We can clearly see a majority in support of pushing through this package."

Alderney Representative Edward Hill told the States it looks like there will be a GST and this would be "a huge blow for Alderney".

However, deputies have voted in principle to exempt utility bills in Alderney from GST.

A successful motion from political party Forward Guernsey could mean the rate of GST could ratchet up to 5% in the years following its introductions, alongside tax breaks and an investigation into methods to keep young people on the island.

Deputies Marc Leadbeater and Andy Cameron also saw their amendment approved, which could mean small local producers are exempt from any GST.

All three of these alterations to P&R's plans would need to be voted on when the final proposals are debated.

An amendment to investigate wealth taxes was rejected by deputies while a debate on Deputy David Goy's proposals which would look to raise money without a GST was halted by numerous guillotine motions.

Opponents of P&R's tax package have warned the acceptance of the reforms could lead to out-of-control spending from the States.

Collins said: "P&R has got into the Christmas spirit. It's Christmas, it's spend, spend, spend.

"We're going to tax even though we've had a massive windfall of additional tax."

Earlier this week P&R announced the receipts from new taxes on big companies were higher than previously estimated, with about £79m expected in pillar two tax revenue this year.

Despite this P&R said there was still a need to broaden the tax base.

P&R member Steve Falla said: "We need to take the pressure off employees paying the way for the island to do things.

"We're 71% reliant on income tax. The OECD average is just over 50%. It's not sustainable."

"We need to find other ways of paying for capital projects, which will make this island a good place to live for our children and our grandchildren in the future."

Treasury lead for P&R Charles Parkinson told the BBC the budget for 2027 would be in two versions, one which included a 1% cut in real terms spending and one which did not.

Collins warned approving this tax package without an intention to cut spending would lead to problems in the future: "In three or four years we'll be back here with the same deficit because if we can't control our expenses, we're just going to tax people more."

Former Chamber of Commerce president Rupert Dorey has voiced his support for P&R's tax package.

"The time has come to make a decision. Not making a decision comes with an enormous amount of attendant risks," he said.

"This has been going on for decades. We have an opportunity now to close this out and settle the issue once and for all."

Dorey said relying on income tax for revenue was a recipe for trouble: "GST is a tremendously efficient tax, it broadens the tax base enormously and reduces our reliance on a single source.

"If a single company here with 100 or 200 people were to move out or close down, that would have a catastrophic effect on overall tax receipts for the States of Guernsey."

"I think that Guernsey is the only mature western tertiary economy that has no form of consumption tax."

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