Guernsey's Chief Minister: Income tax is the only alternative to GST plans

  • Guernsey's Chief Minister Peter Ferbrache outlines the reasons behind the GST.

Guernsey's Chief Minister says income tax will be the only alternative if plans for a Goods and Services Tax in the island are rejected by the States.

Deputy Peter Ferbrache warns that taxing islanders' incomes would place a greater burden on working islanders than GST - and that rejecting the current proposals outright will not fix the States' financial woes.

The comments come ahead of the States debate on the Policy & Resources Committee's tax review, with the island facing an £80 million black hole in public finances as well as the longer term challenge of meeting health and social care demand in the future.

Deputy Ferbrache says his political colleagues 'must face reality'.

Similar to VAT in the UK, GST is paid by everyone on goods at the point of purchase. It has been in place in Jersey since 2008 - it is currently at a rate of 5% and is also applied to all purchases from off-island over the value of £135.

The Policy and Resources Committee says the tax could generate as much as £10 million for Guernsey's treasury from visitors alone if charged at an 8% rate, or £6 million if set at 5%.

The Committee also suggest that GST is introduced alongside other measures, including increased allowances for islanders' income tax and social security contributions.

Deputy Helyar said work was underway on reviewing the island's population policy, but that this would have to be balanced against any changes to income tax levels to ensure Guernsey remained attractive to people wanting to come to the island to work.

Guernsey's Institute of Directors understands the predicament the government is in but has encouraged them to consider all options on the table that could stimulate economic growth and development.

The States will debate the proposals from 9.30am on Wednesday 29 September.