The future of the island’s duty free shops at the airport and onboard Aurigny and Condor will be considered, with a suggestion that they should be included in the review of the island’s tax base.
Deputies Gavin St Pier and Lyndon Trott have placed an amendment to next week’s Budget debate, asking for the impact of duty free to be part of the investigation into how the States raises revenues.
The Covid-19 pandemic has revealed that the island is missing out on millions of pounds in tax revenues because of the sales of cheap drink and cigarettes.
The 2021 Budget notes that the impact of Covid-19 on travel restrictions has meant that people have been unable to take advantage of the duty-free perks.
As a knock-on consequence there has been a big increase in the tax take, because people have had to buy these products in normal shops.
This year the estimated tax take on cigarettes is £11.6m., which is £4.4m. higher than had been anticipated before Covid-19 hit.
The tax take on alcohol has also gone up to £16.5m., which is £1.7m. in excess of the original projection.
Deputy St Pier said the figures meant that Policy & Resources was duty bound to at least consider the impact of the current concessions.
‘We are not seeking to end duty free.
‘But no one can responsibly just ignore the impact on revenues of very restricted travel and duty free sales this year.
‘So this amendment simply directs the Policy & Resources Committee to consider the impact of duty free in conducting their tax review, reporting back to the States having done so and, of course, having taken account of the many related issues including the impact on revenues, travellers, the transport operators, ports and so on.’
From next month the duty free allowances for islanders are 200 cigarettes or 50 cigars, and one litre of spirits or two litres of sparkling wine and liqueurs.
The amendment is open to interpretation, so if successful it would be up to P&R to decide whether goods such as perfumes, beauty products, electronics, and chocolate should also be considered.
The UK has also announced a shake-up of its duty free rules as it tries to regain control over finances.
The review of Guernsey’s tax system is currently considering four different areas – sales tax, health tax, company profits tax, and an extension of the existing income tax and social security system.
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