Sark businesses should be able to avoid a goods and services tax - but discussions are ongoing about how this would work in practice.
The States' Assembly in Guernsey is expecting a debate in January on proposals from the Policy & Resources Committee to introduce GST at 5% on almost all goods and services by no later than mid-2025.
Without special arrangements, goods and services purchased from Guernsey for delivery to Sark could face GST despite Sark being outside the remit of Guernsey's tax collection system.
The Policy & Resources Committee yesterday told Express: "Dialogue is ongoing through the Sark Liaison Group to find the most administratively simple solution to allow Sark businesses to reclaim GST incurred on purchases from Guernsey.
"These constructive discussions will continue should the States approve the introduction of a GST."
Pictured: Unlike Guernsey and Alderney, there is no fiscal union between Guernsey and Sark, above, which puts the smaller island outside the States' tax system.
The Committee published its long-awaited policy letter last week setting out a range of tax proposals - including GST - to increase States' income by an estimated £55million a year.
There is one mention of Sark in the policy letter - in a table which lists goods and services the Committee wants to 'zero rate' for GST purposes. The table includes "transport of goods and passengers between Guernsey and Alderney or Sark or Herm".
"The application of zero rating to exported goods and services is universal in all GST and similar schemes," said the Committee.
"This is because such products are often liable for tax on entry into their destination jurisdiction and the application of a GST from the source jurisdiction is considered a barrier to trade."
Pictured (l to r): The President of the Policy & Resources Committee, Deputy Peter Ferbrache, and his treasury lead, Deputy Mark Helyar.
In addition to GST at 5%, the Committee wants an increase in social security contributions to 8.5% for employees, 8% for employers and 14.5% for the self-employed.
But it also wants to cut income tax to 15p in the pound on income up to £30,000, increase the personal tax allowance by £600 and introduce a personal allowance on social security contributions at the same level as the income tax allowance - currently around £13,000.
The Committee insists that its tax package is fair and progressive. It said the overall effect of the changes would leave most families better off with only the most affluent 40% of households paying more.
The Committee's former Vice President, Deputy Heidi Soulsby, told Express last week that the tax plan was "the final straw" which led to her resignation at the end of October.
She said the plan overstates how much additional tax the States need to raise, ignores opportunities to make efficiency savings and shows no empathy with households facing the largest squeeze on living standards in decades. And she indicated that like-minded deputies were working on an alternative plan to put to the States alongside the Committee's plan early in the New Year.
Pictured: Sark Liaison Group provides a forum for Chief Pleas in Sark, above, and the States in Guernsey to discuss matters of mutual interest.
Pictured (top): Looking towards The Avenue in Sark.
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