Open market tax idea branded ‘hugely damaging’

Financier and open market resident Guy Hands, one of the island’s richest residents, put forward the idea to help deal with Guernsey’s expected tax shortfall.

He made the suggestion last week while deputies spent three days debating tax reforms, including GST, with no conclusion.

The Forum branded Mr Hands’ idea as 'hugely damaging' to Guernsey’s reputation for reliability and stability.

Open Market Forum committee member Ian McCathie said that an open market property tax would be the wrong thing to do.

‘You’d end up with local market residents who are high net worth individuals not having to pay any extra tax because they own a local market house,’ he said.

‘Meanwhile, local market pensioners who happen to own an open market property, but are income-poor, would be forced to pay tax out of their pension despite not having a high net worth. It’s absurd.’

The Forum claimed having a special open market tax would be discriminatory and infringe human rights legislation.

Mr McCathie added that he worried about the future of the open market should such a tax be introduced.

‘If people got to the point where they were unable to pay the tax, they would be forced to sell their home, and the market would be decimated,’ he said.

The forum noted that many open market residents present a very low tax burden on the States of Guernsey, as they often have private healthcare and their children may attend the colleges or schools off-island.

The idea has also not been welcomed by estate agents.

Savills director Nick Paluch, said that, while it was noble of Mr Hands to offer to pay more tax, it was unfair to classify all individuals who own an open market property as having a high net worth.

‘The open market property register is used purely for categorisation purposes and nothing more,’ he said.

‘It is not an indication that someone is of a high net worth. For example, many local people who have been earning an average income will buy an open market property when they reach retirement age.’

Mr Paluch added that any new tax should not just focus on individuals’ property, but on their overall wealth.

‘The taxes we currently have in place already cover the size and style of properties. Individuals’ net worth worldwide should be looked at,’ he said.

Swoffers director Spencer Noyon, said that he understood the need to raise money, and that all options needed to be considered.

‘We would want to have all implications fully investigated before any decisions are made with regard to the property market,’ he said, adding that Swoffers would be happy to be part of that process.

On the Guernsey Press Facebook page, many users reacted more positively to the proposals and one saying it would be more palatable than GST.

In response to the feedback he had received, Mr Hands said he was encouraged by the sensible debate that had been sparked by his idea.

‘Making suggestions in regards to taxation is rather like moving around in a Japanese spa bath - always painful but sometimes necessary. At the end of the day what is needed is a contribution from everyone,’ he said.