Business Leaders Label Income Tax an ‘Inadequate Tool’ for Revenue

Business leaders in Guernsey have stated that income tax serves as an “inadequate tool” for revenue generation, advocating for a broader approach to taxation. The Guernsey International Business Association (GIBA) proposed considering a range of alternative taxes, including those on consumption, empty properties, maritime fuel, and motor cars, as well as the elimination of mortgage tax relief on investment properties. These remarks from business leaders come in response to a proposal from the island’s Policy and Resources (P&R) Committee, which outlined a temporary 2p in the pound increase to income tax as the primary fiscal measure in its budget for 2025. The States of Guernsey has been contacted for a statement regarding the matter. The GIBA asserted, “Income tax does not capture revenue from wealth that remains untaxed under the current system.” The association expressed its desire for the States to work towards rebalancing the island’s tax revenue sources “in line with other jurisdictions, such as Jersey and isle of Man.” It further stated, “Raising personal income tax alone, while aimed at securing financial stability, is unlikely to provide a sustainable solution for the escalating costs of essential services, particularly long-term healthcare, housing and education.” The association elaborated, “Income tax is an inadequate tool, not only because it is a tax on working people, but because the pool of working people in our primary revenue generating sector – the finance industry – is reducing.” Currently, the finance sector constitutes 17% of the total workforce. Additionally, the civil service has expanded by approximately 400 new civil servants during the identical timeframe. The government now stands as the largest employer, accounting for 18% of the workforce.