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Private sector encouraged to propose “workable alternative solutions” to tax review

Private sector encouraged to propose “workable alternative solutions” to tax review

Wednesday 07 December 2022

Private sector encouraged to propose “workable alternative solutions” to tax review

Wednesday 07 December 2022


Guernsey’s Chamber of Commerce is hailing the “first serious attempt” at tax reform since a shortfall in States’ finances was forecast and says it will consult its members and businesses to understand any issues which could arise from its implementation.

In a statement written by Stephen Rouxel, Chamber’s Finance Lead and Board member, the business organisation warned against the private sector criticising or “simply dismissing the current proposals without outlining real world issues or concerns”.

It's asking for all stakeholders to raise concerns or alternative solutions to better understand the pressure points and complications for industry of a wide-ranging goods and services tax at 5% and increased social security commitments, which were proposed by the Policy & Resources Committee last month

Chamber believes that the constituent parts of the States’ shortfall have now been adequately bottomed-out in the most recent tax review policy letter, including a huge forecasted increase in health and pension spending and an expected decrease in States’ investment returns.

It also acknowledged that “cost cutting opportunities” will not go far enough to plug the gap and welcomed the broad package of measures published “rather than a single silver bullet option”. 

Chamber of Commerce

Pictured: Guernsey's Chamber of Commerce is the largest business group in Guernsey, with around 18,000 individuals in some way involved.  

Mr Rouxel listed several positives stemming from the package, including mitigations which “seem to” protect lower income households – such as a new 15% income tax band and social security allowances.

“GST is inflationary and as such any introduction should only be considered in a falling inflation environment which this policy seems to acknowledge,” he said. “There is a proposal to cap cash limits for all committees, except for Health and Social Care, at 2023 levels forcing real term savings to be made”. 

Protections for financial services, as they are in other finance centre locations, were welcomed, as was attempts to broaden the tax take by capturing tourists and non-residents who spend in-island.

However, Mr Rouxel noted that a “binary choice” is being presented between tax increases and “politically impossible cuts in government service”. 

“Whilst this is more politically expedient - an easier tax to raise - as decisions on where to cut and when are notoriously challenging, a degree of spend prioritisation may be more appropriate whilst phasing in new tax raising during a lowering of living standards.”

There is no exploration of targeted consumption taxes such as sugar taxes which, whilst would not be sufficient to fill the deficit in any meaningful way, would impact on behaviours which drive cost.”

Members of Policy & Resources have already argued against targeting or exempting specific things from any GST, claiming that administration costs can increase and become more complicated.

READ MORE...

Tax plan includes 5% GST - but P&R says most families will be better off

Why States leaders STILL think GST and tax reform is needed

Social security changes help poorer families and 'middle Guernsey'

"Unacceptable" and "damaging" service cuts if States reject GST

Is corporate tax the answer?

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