Some could be given 'cash payment' to offset GST impact

Those among the highest earners will be worse off by between 1% and 3% a year.

But for those at the lower end of the income scale, including people on a pension, there are planned increases to benefits or pensions and those in the worst financial situation would simply be given a payment.

These payments and increases would be made before the changes came into effect, said Employment & Social Security president Peter Roffey, to avoid people ending up a year in arrears.

‘We don’t want people to be worse off for a year,’ he said. ‘We’re going to predict the inflationary effects of GST and take action in advance.’

People on income support would get a 5% rise in their benefits in advance. Their benefits are based on a basket of goods, all of which will increase by that amount if GST is approved.

There would be a 3.4% increase in pensions, since housing costs will not be included, said Deputy Roffey. However, this will be adjusted as necessary.

And for those who are not pensioners and not on benefits who are not particularly well off, there would be a payment: ‘It’s fairly crude, but households below a certain level of income will just get some cash.

‘They will receive money to compensate them for the impact of GST if they are on very modest incomes but above income support level and not pensioners.’

Figures released by the committees showed that a household with an income of £75,000 a year would not be very much worse off (less than 0.5%), while the richest 20% of the island’s population could be between about 1% and 3% worse off.

Two people with an income of £50,000 would be very slightly better off, by about 0.5%, while those earning £25,000 and under between them, the poorest 15% of the island’s population, would be between 1% and about 3.8% better off.