Guernsey Press

TRP hike and motor taxes possible if GST is rejected

ISLANDERS could face a big increase in taxes on property and motoring, as well as deeper cuts to services and higher social security costs, if the States reject GST next week.

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Policy & Resources president Deputy Peter Ferbrache unveils Option B. (Picture by Sophie Rabey, 31781967)

The proposals are included in an alternative financial plan published today by the Policy & Resources Committee.

It wants deputies to vote on its new alternative plan – called option B – if they kick out the committee’s original option A, which remains largely unchanged.

Under the option B alternative, TRP on domestic properties would go up by 50%, possibly with a deferral scheme for low-income pensioners. Additional taxes on motoring would bring in £15m. a year. Social Security would need to raise more than £30m. a year. And public spending cuts would reach up to £16m. a year.

‘Our committee remains strongly of the view that the best outcome by far for lower and middle earners and for getting public finances back on a sustainable footing is our original propositions,’ said P&R president Peter Ferbrache.

‘Option B is a viable package that can raise enough revenue to ensure essential services, but it is a more blunt approach that does not help those on lower incomes.

‘We’ve put together an option B that we hope States’ members feel they can support, if they really believe they cannot vote for any package that includes GST, no matter how progressive it is overall.’

P&R is making no substantial changes to its preferred option A package. It still includes 5% GST, a 15% income tax band, higher personal allowances and an overhaul of social security contributions to take more from higher earners and less from lower earners.

Option A and option B both include an additional £20m. a year from increasing taxes on companies. They are also both estimated to improve States’ finances by around £85m. a year.

P&R also has a backstop option C which it wants to put to the vote if A and B are defeated.

Option C includes increases in social security contributions and taxes on companies and around £31m. a year of public spending cuts.

‘Essential services are already strained and demand is rapidly growing, especially in healthcare,’ said Deputy Ferbrache.

‘They would be severely damaged by such drastic cuts. I hope the States at the very least do not take us down that path.’

He said that all members of P&R would support option B, if option A is defeated when the States’ landmark tax debate resumes a week today.