Tax reduction idea for local distillers fails
THE potential reach of an amendment to companies outside of the island gave some members cause for concern yesterday and that may have been responsible for it failing to be approved.
Lodged by deputies Simon Vermeulen and Nick Moakes, the amendment’s aim was to give independent small distillers of spirits a 50% tax reduction in the price of what they supplied.
This would apply to distilleries that did not produce more than 20,000 litres a year.
In his introduction, Deputy Vermeulen said the goal was to help local producers and it would bring this sector into line with small breweries of beer and cider.
But Home Affairs president Rob Prow said that this amount was one-fifth of the total amount of spirits sold across the Bailiwick each year.
The amendment also had to be couched in terms that could not be ruled anti-competitive under EU rules and so would apply to non-local distillers, and Deputy Peter Roffey pointed out that there were a large number of these, particularly producers of gin.
Deputy John Dyke suggested that this situation might change once Guernsey adopted the rules of the World Trade Organisation, which might mean that local producers could be favoured.
While there was general support for the aims of the amendment, to encourage local business, a note of warning was sounded by Deputy Prow who raised several points including the impact that the amendment would have on resources from the Customs and Excise department, already busy with Brexit matters, as well as the need for changes to be made to the States’ Electronic Manifest System.
Home was totally against the amendment, he said.
In his maiden speech, Deputy Steve Falla said that it took a huge amount of courage to set up a business and he was fully behind the amendment.
It was important to support private enterprise and small independent producers were a good way of marketing the island.
Policy & Resources president Peter Ferbrache said that while he commended the proposers of the amendment for looking to support local businesses, on this occasion there were too many impediments and he hoped it would not succeed.
P&R’s treasury lead, Deputy Mark Helyar, said that while the committee had a lot of sympathy for local businesses, P&R could not support it. He said for an amendment such as this one to have a proper effect, the £8 reduction in the price of a bottle would not have to be passed to the customer, but put on to the price of a bottle as profit to avoid spirits being offered at massive discounts. He went on to suggest that perhaps implementing a price-per-unit on alcohol could help address this.
The amendment was lost by 20 votes to 17 with two abstentions.
