GST would be disastrous for local sector, say retailers
RETAILERS have slammed the States for not doing enough to support their and several other sectors of the economy.
The Guernsey Retail Group said that the Policy & Resources Committee’s latest proposals for a goods and services tax – its third attempt to get it through the States in two years – indicated a failure to recognise the value of sectors unrelated to financial services.
It was the group’s latest broadside in a war of words with P&R over the likely impact of GST if the senior committee secures the backing of the States to introduce it at 5%, or 6% excluding food, in 2026.
‘GST would be disastrous for the retail sector,’ said head of retail development Korinne Le Page.
‘It would increase IT and administration costs, add to prices at the tills, and does nothing to level the playing field with UK and foreign retailers.
‘The imposition of a [5% or] 6% tax would naturally reduce the disposable income of consumers and their ability to spend in shops.
‘We would also question what the States is doing to address the root issue of an ageing demographic and make the retail and hospitality industries more robust.’
P&R’s treasury lead Mark Helyar recently challenged claims that GST could lead to the closure of up to one in four shops locally. He said it was ‘a common misunderstanding but not true’ that the tax would damage small businesses.
The GRG claimed P&R would find it impossible to tax UK and foreign retailers supplying goods to the island and therefore local retailers would be at a 5-6% disadvantage as a result.
The group’s comments were made on the same day the Guernsey Press reported on the expansion into the island of classic and vintage car specialist firm Le Riche, a Jersey company, which said the absence of GST helped persuade it to locate a new arm of its business in Guernsey.
‘When you buy a car as an investment, you are looking for that capital appreciation, and you also want to minimise the tax load you have to pay as the car moves from one country to another,’ said Le Riche founder Joe Castellino.
‘As Guernsey doesn’t have any consumption taxes, such as GST or VAT, it is an ideal jurisdiction for a freeport-type service, enabling the client to set up a Guernsey company through which it can buy the vehicle tax-free.
‘Critically, not only does this reduce the purchase price, but it also brings benefits when it comes to its resale as there are no taxes built into the sale price.’
Deputy David De Lisle, a vocal critic of GST and a director of a retail business, said GST would damage retail companies and suffocate economic growth.
In a letter to the Guernsey Press, due to be published on Monday, he refuted claims made by the Chamber of Commerce that sophisticated software would simplify GST administration even for small businesses.
‘These programmes in many cases cost thousands of pounds and require real time and expertise to install and upkeep,’ he said.
‘Most small businesses run on basic needs and systems. The increased financial stress means decisions will have to be made whether to continue or fold up and close the doors.’
P&R tried to reassure businesses yesterday by releasing an example form for GST returns which involved only a few questions on a single page or less.
‘In many jurisdictions, businesses are very used to accommodating a consumption tax and it causes them very little in terms of additional administration.
‘But I appreciate that this would be new for Guernsey businesses, and because of that there’s concern it would be a bigger and more cumbersome task than it really is,’ said Deputy Helyar.