P&R taking GST proposal to the States for a third time
GST will not be introduced before the 2025 general election – even if Policy & Resources gets it through the States next month.
The senior committee has confirmed that it will propose GST for a third time, together with additional borrowing of £350m., to help fund more than £500m. of capital projects and deal with a hole in States finances projected to grow to £50-100m. annually over the next decade.
P&R will ask the States to agree to GST at a rate of 5% on almost all purchases, a proposal which it lost in February, or alternatively at a rate of 6% excluding food.
‘Even if it had been approved in February, it was going to be April 2025 at the earliest before it could be introduced, and now we’ve lost several months, so it’s going to have to wait until 2026, if the States agree it next month,’ said P&R president Peter Ferbrache.
At a briefing for the media, P&R said the States was struggling with no agreed plan to make public finances sustainable or invest in essential infrastructure projects, and that its proposal for tax rises and additional borrowing was the only responsible response.
‘We are almost at the end of the runway and we’ve got to start making difficult decisions.
‘We are trying to achieve sustainable public finances for future generations,’ said Deputy Ferbrache.
‘It’s up to the States. It’s make your mind up time.’
P&R will present deputies with three options.
Its preferred option, which it has called scenario three, includes the same tax package it saw defeated earlier in the year but with the addition of £350m. of borrowing.
Scenario three would provide maximum funding for capital projects, including the redevelopment of the Princess Elizabeth Hospital and Education’s post-16 campus at Les Ozouets.
It would also provide £2.5m. of extra funding each year for new services.
Scenario two allows the hospital and post-16 capital projects to go ahead, partly funded by £200m. of additional borrowing.
But it defers some capital projects and does not include GST or any of the other personal tax changes proposed by P&R previously, which the committee said would fail to deal with the annual hole in States finances.
Scenario one also excludes GST and the other personal tax changes, and features no additional borrowing.
It would require deferring most capital projects, including both the hospital and post-16 campus, and leaving a future States to deal with the annual hole in finances.
All three scenarios anticipate raising an additional £25m. of tax revenue per year from companies and motoring, as well as cuts in States spending of £10m. a year.