States goes online to engage on tax review
THE tax review debate may be delayed a few months but the promotion of a goods and services tax as the most effective and fairest way to meet the island’s forecast annual deficit continued last night as the States took to Facebook in its latest engagement exercise.
At its peak a 75-minute live broadcast had about 150 people tuned in, with questions and comments coming from about 20 of them.
Senior politicians from the Policy & Resources Committee admitted that the delay will likely mean that GST, if backed by deputies, would not be introduced until after the next election. A debate at the end of 2022 and a vote for a GST would mean at least a two-year lead-in time.
‘It’s unlikely that we would see a GST imposed before the end of 2025,’ said Deputy Mark Helyar.
The panel outlined that a 1% GST could be expected, based on Jersey’s experience, to raise some £11m. a year, while 1% on income tax would raise £13m. The cost of collection would be less than £1m. a year.
Former accountant Mark Thompson, a non-States member on the tax review panel, revealed that early sums had indicated that the average cost to each household through raising £85m. from income tax would be 1.5% on a progressive basis.
Under GST the impact on average households was 0.6%, which he said demonstrated the number of other sources of income which could be drawn from.
‘When you’re looking at the packages as a whole you can come up with some quite progressive packages, blending together a number of measures,’ he said.
The panel confirmed it intended to charge GST on a wide range of goods, to keep the overall rate lower.
Deputy Peter Roffey, who reprised his days presenting the BBC Guernsey phone-in as event chair, said he was delighted with the flow of questions.
‘We really weren’t sure how this would go but people have really engaged with it,’ he said.
Tax debate ‘not this summer, but by end of year’
PART II of the island’s big tax debate will take place towards the end of the year, not this summer, P&R has finally confirmed.
The committee agreed yesterday, after its final tax review roadshow event at Cobo the previous evening, that it was going to delay until some time in the final three months of the year, a decision expected and heavily trailed for some weeks.
P&R is also now finalising an agreement for a review of the island’s corporate tax options with a preferred bidder, which may be able to take some of the tax pain away from islanders, and that review should be completed during the summer.
The committee said it was important that the report was considered before an ‘informed debate’ took place on the tax review.
‘The committee is also mindful of the feedback from the community to take into account the considerations around population which are the focus of the ongoing population review, and the delay will allow for this work to be part of the public and political discussion on revenue-raising measures,’ it added.
The debate though will happen before the end of the year.
‘Already, the impacts of the changing population make-up are being felt, putting greater demand on health services and other costs, and there is an urgency in agreeing a long-term solution so that the detailed work on reforming the tax and social security systems can happen. That detailed work to develop and implement any changes that the States ultimately agrees would take some time, and so it is not anticipated that the changes would take effect for at least two to three years,’ it said in a statement.
The first iteration of the tax debate started last summer, dragged across the States summer recess, and was then stopped in favour of more consultation. Initial response to the launch of the consultation process immediately put the committee on the back foot and it has been long-expected to delay again, given the need to consider corporate tax more seriously.