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Guernsey's treasurer says by reducing the upper cap for personal tax allowances, the island will be asking those who earn the most to take on more of the tax burden.
Deputy Mark Helyar, the Treasury Lead on the Committee for Policy and Resources, published his 2023 Budget a few days ago.
One of the headlines focused on an increase in personal tax allowances.
Pictured (l-r): Deputies Peter Ferbrache and Mark Helyar.
Presenting their third budget since being elected in 2020, the President of the Policy & Resources Committee, Deputy Peter Ferbrache, pictured (left), and the Committee's Treasury lead, Deputy Helyar, pictured (right), unveiled three changes which they said would help address cost of living pressures facing households, among their other intended policies.
The increase in personal allowances on income tax by £850, or 7%, to £13,025 a year, a freeze on property tax for domestic properties with a TRP rating of less than 200, which includes nearly three out of four local market properties, and a one-year pause in the gradual withdrawal of mortgage interest relief, which will delay an increase of up to £600 to the tax bills of qualifying couples.
These changes will be largely offset by increasing other taxes and charges to raise an additional £1.7m. in 2023.
Vehicle first registration duty will be doubled, commercial properties and larger domestic properties will face increases in property tax above the rate of inflation, and duty on alcohol will go up by 7.5%.
Pictured: Smokers, drivers and drinkers face another round of hikes in duties as part of measures to raise additional income in the 2023 Budget.
Confirming the details around the £850 a year increase in personal tax allowances, Deputy Helyar told Express it is a "progressive" measure - aimed at ensuring "the higher paid will be taking on more of the burden."
He explained that pre-approved changes to the upper cap for income tax personal allowances will be modified further to exclude more higher earners from receiving their full personal tax allowance.
"The higher paid don't have any tax allowances," he said, "they start to get withdrawn at the moment, from your salary above £100,000.
"In this budget we're reducing that down to £90,000, so you start to pay more tax sooner, and that tax will offset the increased allowances for the less well off at the bottom end.
"It's progressive so the higher paid will be taking more of the burden."
If the States' Assembly backs the draft budget the change to personal tax allowances will come in from January.
The draft Budget will be debated at a special meeting of the States which starts on Tuesday 1 November.
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