Policy and Resources Committee Proposes Temporary Income Tax Hike and Broader Fiscal Reforms

Leading political figures in Guernsey are preparing to put forward a provisional increase of 2p per pound sterling in income tax, in conjunction with more extensive tax overhauls, such as a goods and services tax (GST). According to Policy and Resources (P&R), this initiative is intended to “deliver a short-term cash injection”. Peter Roffey, the deputy who has championed plans for a GST, stated that the newly introduced package guarantees the income tax rise will be in effect for only two years “before the wider tax package kicks in”. Meanwhile, P&R President Lyndon Trott indicated that the fresh proposal aims to provide deputies with a chance to “stabilise public finances”. This latest package, however, continues to encounter opposition from other political figures. Deputies Charles Parkinson and Liam McKenna have, for instance, advanced a plan to raise corporate tax. Concurrently, Mark Helyar, a former Deputy Chief Minister, has presented a suggestion to freeze the States budget. Off the record, some deputies have expressed doubts that any of the proposed tax reform alternatives will secure a majority vote among their colleagues. Previous suggestions, including the implementation of a GST, a reduced income tax rate for incomes below £30,000, and an overhaul of social security contributions, were rejected in 2023 with a vote of 25 against 15. Separately, Trott’s earlier effort to increase income tax garnered only 10 votes during its debate in 2023. When presenting this latest amendment to the 2025 budget, Trott stated his awareness of deputies “who want to deal now with the long-term sustainability of public finances”. Roffey, who serves as the Employment and Social Security President, confessed to an initial hesitation regarding his support for proposals to raise income tax. However, he remarked: “At least this package ensures it would be for two years only before the wider tax package kicks in. “It will not be easy for me to support income tax increases given my well-publicised comments but it is sometimes crucial to make significant compromises within our consensus style of government.”