GST election issue fears from tax panel members
THERE are fears that continuing to delay debate on the island’s tax review could lead to a goods and services tax becoming an election issue for the summer of 2025.
It is highly likely that even if deputies were to approve a GST in the debate now pushed back to the end of this year, implementation will take a couple of years, based on the experience in Jersey, which would take the start date past the election in June 2025.
Members of the States tax review steering group have expressed concerns about the impact of continued delays.
In this week’s Facebook live presentation, Deputy Peter Roffey suggested that a decision should not be left for the next States, and Deputy Mark Helyar said he did not want to see GST become an election issue.
‘I don’t want this to become the key, the only, issue in an election, because there are lots of other things that we need to be doing as well,’ he said.
‘I would stress you need to put in an implementation process, it’s probably a two-year process, and if we do not get a GST or some alternative then we cannot do the proposed changes to [the structure of] social security. These two things are symbiotic.’
It is expected that any corporate tax changes would come in before the introduction of a GST, but a former senior finance figure in the island has warned the States that it cannot wait and hope to be bailed out of the tax review by global corporate tax changes.
Mark Thompson, former senior partner at KPMG, and a one-time chairman of the Institute of Directors in Guernsey, is now a non-States member of Employment & Social Security, and sits on the review panel.
On the Facebook broadcast he said he backed the renewed focus on corporate tax, but said that other revenue-raising measures could not be left behind in the hope that corporate tax would raise £85m. to cover the forecast future annual revenue deficit.
‘I think the £10m. estimate [for corporate tax, already factored in to the tax review thinking] is probably quite realistic. We might be able to squeeze a bit more, but I wouldn’t hold my breath over that.
‘What I’d be concerned about is if the whole package gets delayed because we think in a couple of years’ time the OECD might help us raise a bit more corporate tax.
‘These things take a while, then we put a new system in of corporate tax, it takes a few years before we know how much it’s raising, and suddenly five years have gone by, and if it’s not raising more than £10m., we’ve gone nowhere, we’ve lost five years, and we’re in an even more urgent situation.
‘We have to keep moving forward. Of course we do the review, but we can’t wait forever for corporate tax.’
Deputy Helyar said it was not guaranteed that the United States would support the OECD’s proposals for global tax harmonisation, and without US backing, that option may fall.
