Islanders earning below £30k a year ‘better off’ under GST

PEOPLE earning less than £30,000 a year would need to spend more than £47,000 on items subject to GST to be worse off, Citizens Advice Guernsey has calculated.


The charity, which gives advice on social and money problems, has been analysing the Policy & Resources tax review proposals

to see how they would affect islanders.

‘This is a political decision, and we can only limit our comments to the possible effects on the Guernsey population,’ the charity said.

‘While introducing GST is inflationary, the States appear to have also linked it to direct tax savings for low-income earning people and families in two areas that do look to be quite material.’

CAG said that lowering the tax rate from 20% to 15% on taxable income up to £30,000 would bring a saving of £1,500 per annum.

Added to that, a tax allowance on employees’ social security contributions gave a saving of 6.7% on £13,000 – based on the 2023 allowance figure – which equates to £871 per year.

‘This is a saving of £2,371 per annum per person,’ CAG said.

‘This is a direct saving. In terms of how much a person would have to purchase that equates to £2,371 of GST is £47,000.

'So, it appears that the proposed tax saving is a real benefit to mitigate the effects of the tax.’

Citizens Advice said that the cost-of-living crisis was also inflationary, and there appeared to be no mitigating factors to relieve the financial burden on individuals and families.

‘The oddity of this particular crisis is that it is very much supply-side driven,’ they said.

‘Previous cost-of-living crises have been more demand-side drivers creating a shortage in supply.

'This one is the opposite as it is generally a lack of supply being able to satisfy normal demand that is causing the inflation and hardships.

'This may be why there is a feeling that this inflationary period is so unfair because it is largely being caused by world-wide supply-side problems.

'This is also showing a severe weakness of globalisation when so many countries can be reliant on any one country to supply so many important goods.’

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