‘Company tax would raise at least £20m.’
ADOPTING new corporate income tax laws would raise at least £20m., Charles Parkinson has said as he published his alternative to GST.
The former Treasurer & Resources minister was one of eight deputies to launch the 'No to GST' campaign last week, and he has formally produced an amendment to the debate.
‘We need a specific company tax, to tax corporations and individuals who use companies for tax purposes,’ he said.
Deputy Parkinson’s amendment removes all the other tax reforms suggested by P&R to mitigate against the impact of GST for those who might be struggling financially.
This includes a new 15% income tax band, a higher tax allowance and change to the social security system.
‘I see them as a bundle of proposals. The basic pressure on our system is due to zero-10. A large number of companies don’t pay tax.
‘We need to sort out our corporate income tax first and then see what needs to be done. It is a vital part of the solution and the right place to start.’
The zero-10 regime, which sees most companies locally pay 0% corporation tax
on their profits and financial institutions pay 10%, has
been in place for more than a decade.
Deputy Parkinson does not think a higher corporation tax will make Guernsey uncompetitive compared to other Crown Dependencies.
‘The finance industry already pays 10% tax, and the growth part of the industry is with fund management who are already exempt and we have no intention of changing that. In my view there would be no change to the competitiveness of our finance industry.’
He will be presenting his proposal on Monday night at the St Pierre Park Hotel, and all 200 tickets for the event have been snapped up.
Another 'Say No' deputy, Liam McKenna, is seconding the amendment. But Deputy Parkinson said he was not sure how many others from that group of nine will attend his meeting.
‘Some will be there. I hope my plans to reform corporation tax will be popular. What unites us all is that we are against GST.’
But P&R warns of reputational risk
POLICY & Resources has warned that Charles Parkinson’s tax review amendment would lead to enormous annual shortfalls in States revenues, and urged deputies not to support it.
P&R vice-president Mark Helyar, said the committee was already in favour of raising revenue through changes to corporate tax.
‘That’s why our own recommendations include developing those options,’ he said.
‘We recognise Deputy Parkinson’s preference for a territorial tax regime and that’s why we asked EY to investigate it.
‘But we need to be very careful that we don’t create so much uncertainty that we damage the very sector that drives our economy.
‘If we proceed headlong down this road, it could put question marks over our credibility as an international finance centre, and do irreparable damage.’
According to EY’s independent review of corporate tax options, changes to corporation tax could generate a maximum of £20m. P&R said this was far short of how much would be needed to address the predicted annual budget shortfall.
P&R president Deputy Peter Ferbrache said the amendment would appear enticing to those who oppose any package that includes a GST, even if that package will mean low and middle-income earners are better off.
‘If P&R thought that this was a realistic alternative we would grasp that nettle and we would be delighted to go along with those proposals,’ he said.
‘Territorial tax might come along in the future, but it’s some years off yet. We have to be competitive.
‘We can’t move away from both our friends nearby, who are also our competitors nearby, Jersey and the Isle of Man etc.’
‘Deputy Helyar has said 1,000 times, I’ve said 999 times to Charles and their ilk – “speak to us, cooperate with us, talk to us, let’s do it in the most constructive way.”
‘And instead we get what we get at the twelfth hour.’