Guernsey States approve GST plans, reject income tax increase

Proposals for implementing a goods and services tax (GST) are set to be developed, following the rejection of an income tax increase by the States of Guernsey. Policy & Resources (P&R) will now commence work on tax reforms, which include a 5% GST, reduced income tax rates for earnings below £30,000, and social security adjustments, all scheduled to begin in 2027. Lyndon Trott, President of P&R, cautioned that without the £34 million that would have been generated by the temporary income tax hike, certain projects would face cuts. In 2023, Guernsey’s States twice voted against plans to introduce a GST. In an interview in October, Trott indicated that rejecting the income tax increase, which was projected to raise £34 million, could lead to the cancellation of the hospital extension and additional housing construction projects. P&R is anticipated to present an emergency budget in the early part of 2025. Twenty deputies cast their votes in favor of the GST package, while fifteen voted against it. During the debate on the 2025 budget, Heidi Soulsby, Vice-President of P&R, informed her colleagues that the only immediate method to secure the necessary funds for public services was to raise income tax. She stated, “we won’t get a bean from GST for at least two years”. Deputy Carl Meerveld, a leading opponent of a GST, remarked that this decision would transform the 2025 general election into a referendum on GST. He commented, “I had hoped deputies had listened to the thousands of people who campaigned against GST, apparently, they have short memories and now GST will become the primary issue at the next election”. Yvonne Burford, President of the Scrutiny Management Committee, agreed that this would result in a “single issue election”. Deputies Peter Roffey, Peter Ferbrache, David Mahoney, Andrea Dudley-Owen, Mark Helyar, Neil Inder, Rob Prow, Sasha Kazantseva-Miller, Jonathan Le Tocq, Bob Murray, Andy Taylor, Al Brouard, Simon Fairclough, Nick Moakes, Victoria Oliver, John Gollop, Sue Aldwell, Lester Queripel and Sam Haskins supported the proposals for tax reform, including a GST. Alderney representative Steve Roberts voted in favor of the proposal, while his compatriot Alex Snowdon abstained. The fifteen deputies who voted against the measure were Chris Blin, Yvonne Burford, Andy Cameron, David De Lisle, Lindsay De Sausmarez, John Dyke, Steve Falla, Chris Le Tissier, Marc Leadbeater, Aidan Matthews, Liam McKenna, Carl Meerveld, Heidi Soulsby, Lyndon Trott and Simon Vermeulen. During the previous debate on GST by Guernsey’s States, Deputy Sasha Kazantseva-Miller voted against proposals to introduce the tax. However, this time she supported the proposals, stating: “This could cost me at the election, but I think GST is the only way forward”. Deputy Lester Queripel also reversed his previous stance, having previously campaigned against a GST. He explained: “I’m voting the way I’m voting as I believe it’s the best thing to do for the community in the short, medium and long-term”. Proposals to increase income tax for two years were criticized by former Chief Minister Peter Ferbrache. He described P&R’s action as “dangerous in the extreme”. He further added that he did not believe the public would consider this a temporary measure. Deputy John Dyke joined Ferbrache in his criticism, remarking: “We’ve had the 20% income tax rate for 60 or 70 years. It’s been the basis of our financial offer to the outside world. If we start messing around with it, nobody will believe it’s temporary.” Deputy Liam McKenna was similarly critical of plans to increase income tax, stating: “It is beyond belief we are looking at putting income tax up, while Jersey stays at 20%. I don’t believe this will be a temporary increase”. Proposals to ensure Guernsey residents can reside in new temporary accommodation received approval. P&R had initially put forward a plan to construct new temporary villages for construction staff and keyworkers. States members also endorsed a proposal from Deputies Rob Prow and Neil Inder to provide tax breaks to small distillers and brewers. A proposal to grant tax relief to small landlords was also sanctioned by deputies. Concurrently, an attempt to extend the period for the withdrawal of mortgage interest relief on people’s main homes also gained approval. Following the vote, a consultation between P&R and the island’s public sector unions will take place, focusing on staff pay and conditions. This scheme superseded a prior decision by deputies to explore guaranteeing that new States employees are appointed at a fixed pay rate and that public sector positions remaining unfilled for six months are terminated. Follow BBC Guernsey on X and Facebook. Send your story ideas to channel.islands@bbc.co.uk. Copyright 2024 BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking.