Zero-10 regime should be scrapped – Parkinson

Reacting to tax-raising proposals from the Policy & Resources Committee, announced earlier this week, Deputy Charles Parkinson said they completely missed the fundamental point.

‘Guernsey’s fiscal problems started with zero-10 and will start to be resolved when we replace zero-10 with a sensible corporate tax system,’ said Deputy Parkinson, a consistent critic of the island’s corporate tax reform since it was introduced in 2007.

‘I don’t see the merit of putting up taxes for the general population of Guernsey when the fundamental problem is that the corporate population hasn’t been paying enough tax ever since zero-10 was introduced.

‘I’ve consistently supported the reform of the corporate tax system because it’s the right thing to do.

‘Some people have accused me of being populist and trying to court votes, but that doesn’t underlie my position at all, my position is simply let’s do the right and sensible thing from a tax policy perspective, and the right and sensible thing to do is replace zero-10.’

The zero-10 regime, which sees most companies locally pay 0% corporation tax on their profits and financial institutions pay 10%, has underpinned the international competitiveness of Guernsey for more than a decade.

However, it looks likely to be axed at some point as the Organisation for Economic Co-operation and Development moves towards a global base rate of corporate tax.

Policy & Resources wants to wait until the OECD has offered more direction, but Deputy Parkinson said that was not necessary.

He believes that P&R may be labouring under some misconceptions.

‘I don’t think there’s anyone on P&R who knows very much about international tax.

‘I did it for my living for 25 years, I’ve been treasury minister in Guernsey and I’ve written books on international tax subjects and I know how it works, and quite simply they don’t, nor do the civil servants who are advising them. And unfortunately the advice they are receiving from some people in private industry is heavily conflicted because these people earn their living and get paid handsomely by companies that are potentially or actually taxable in Guernsey.’

‘GST would hit the poorest, health tax idea is nonsense’

DEPUTY Parkinson has given short shrift to all three options put forward by Policy & Resources to raise more revenue – an income-based health tax, an 8% GST, or a 5% GST.

He said a GST would hit the poor, and described the health tax as ‘a nonsense’.

‘That’s simply an increase in personal income tax for all Guernsey residents, and I think that the 20% income tax rate is somewhat sacrosanct, it’s been the cornerstone of Guernsey’s economic prosperity since 1960, and I think we tamper with that tax rate at our peril.

‘I think the absence of GST and VAT is something we should market more, it’s a strength of the island.’