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A deputy will urge States members to investigate reforming property taxes to possibly replace document duty and domestic TRP, dismissing a suggestion from Policy & Resources to increase TRP by 50% if GST is rejected.
Deputy Aidan Matthews confirmed to Express that an amendment to that effect will not be withdrawn ahead of the resumed tax debate next week.
He labelled it “one of the only amendments looking to solve the problem” and that he has “become more convinced” of that as the Tax Review has rumbled on.
He also said he was “not that impressed” with the new suggestion from P&R of increasing TRP by 50% across the board should the GST package fail in the States.
Deputy Matthews suggested it could show that P&R are “almost in a panic state, wanting to shift up any levers they can”.
Pictured: Property taxes are amongst the least likely to be evaded.
TRP is calculated using the metric system, measuring the roofline via GPS and digital mapping imagery. A TRP unit is awarded for every square metre of home and 50 sqm of land. The bigger the space, the bigger the bill.
The amendment, if successful, would require that P&R report back no later than June 2024 with details of how a proportional property tax based on market value would be calculated, who should be exempt, and whether to apply higher rates to those with multiple properties, empty properties, or foreign owned properties.
A deferred tax scheme could also allow the ‘asset rich but cash poor’ to refrain from paying until the property is sold to prevent premature sale of a sentimental home or to encourage right-sizing.
Deputy Matthews believes this might replace document duty to help first time buyers, make the tax fairer, and supersede TRP which he said is “not a great way” to raise government revenues, which is backed up by the OECD.
“It’s really helpful to see organisations like that studying it in-depth,” Deputy Matthews said.
Pictured: Premium rates could deter second home owners from allowing properties to become substandard or derelict.
Wealthy residents should be able to afford the new rates under the reformed system, and Guernsey would remain competitive as rates ought to be below other jurisdictions.
Deputy Matthews welcomed a suggestion from financier Guy Hands of a 1% levy on Open Market properties but said any rate needn’t be that high.
He also sought to dispel perceptions that dozens of extra public servants would be needed to administer such a tax, which relies on regular assessment of a property's real market value.
Automated mass appraisal methods for calculating property values are achievable and would remove the need for many staff to manually calculate values at regular intervals, according to Deputy Matthews, who has professional experience with software.
“[Guernsey] is a long way to doing that by automation,” he said. “Jurisdictions already use software for these purposes, one of the main data points is from satellites which we’ve already got… I think we’re in a good position for that”.
Pictured: Deputy Gollop has worked with Deputy Matthews on three tax amendments.
Deputy Matthews also confirmed that he expects two amendments, fronted by Deputy John Gollop, to also be debated next week.
One seeks to exempt all food sales in restaurants, farms, stalls, supermarkets, and other providers if GST is introduced, as well as locally registered charity shops serving food and selling clothing and literature.
They also launched an attempt to raise the income tax personal allowance from £13,025 to £18,550 – the same as Jersey which collects GST at 5%. They say this is more generous and would bring Guernsey in line with its neighbour.
Deputy Matthews said he is “not morally comfortable taxing food”, and there is evidence doing so makes the tax “even more regressive”.
Deputy Yvonne Burford also confirmed she will still lay her amendment next week, which seeks to reduce P&R’s delegated authority for capital projects from over £500m back down to £5m.
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