Help aimed at those hit the hardest by cost-of-living rise
AN INCREASE in personal income tax allowances and a one-year pause in the phasing out of mortgage interest relief are two of the measures being proposed in the Budget to help support islanders in the face of the rising cost of living.
But accompanying these are proposals to raise £1.7m., which include a rise in the tax on rateable property for those with a rating of 200 and over, doubling the rates of duty charged for first vehicle registration, and a rise of 7.5% in TRP on commercial property.
These will be in addition to the annual duty rises on tobacco, alcohol and fuel.
The plans to raise revenues are described as a ‘drop in the ocean’ compared to the anticipated need for some £80-£90m. to be raised in the medium term.
P&R said its proposals are particularly targeted at lower-income households.
It is suggesting a 7% increase in personal allowances, raising them by £850.
The cost would be funded by a lowering of the threshold for higher earners, said P&R treasury lead Deputy Mark Helyar.
‘The point at which allowances start to abate at the moment is about £100,000. If you earn over £100,000 a year you start to lose your personal allowance – that will be down to £90,000. So the two cancel each other out.’
There are various measures to raise funds put forward, and it is strongly hinted that sterner ones will be in the tax review, which is due to be published at the end of next month.
The phasing out of interest relief on domestic let properties, and a 2% rise in document duty on all residential properties which are not an individual’s main residence, are also suggested.
And a move to encourage development of derelict sites and the use of empty properties will come in the form of much higher tax on rateable property rates for these sites. If the States likes this idea it will be pursued in 2024.
First registration duty on vehicles will be doubled, commercial TRP will rise by 7.5% while domestic TRP will go up about 8%, but not for properties with a rating of under 200. It is estimated that three-quarters of local market householders will benefit from the saving.
Elsewhere, there are proposals to provide funding for the deficits of some of the States-owned utilities, including a transfer of £6.2m. to Guernsey Ports.
‘This Budget paints a stark picture of how fast the cost of providing our existing services is rising,’ said P&R president Deputy Peter Ferbrache in his foreword.
‘These are services people rely on, and we need to face the very serious problem of how we fund them in the future. If we’re not prepared to do that, we must make the even more difficult decision of which ones we will stop.’
