‘It feels like P&R is kicking the can down the road’
A LOCAL tax adviser has accused the Policy & Resources Committee of continuing to ‘kick the can down the road’ when it comes to addressing the island’s public finances – despite a proposed two-year hike of 2p on the personal rate of income tax.
Paul O’Neill, managing director of LTS Tax, pictured, said he was disappointed that the committee appeared to be demonstrating more short-term thinking in its 2025 Budget, and was also concerned about the effect that the proposal could have on high net worth individuals seeking to leave a new tax environment in the UK under the Labour government.
‘The messaging is wrong on a number of levels,’ said Mr O’Neill, speaking on the day when Guernsey government and industry were out in force in London, seeking to woo individuals to move to the island.
‘Guernsey is seeing unprecedented levels of HNWI’s wishing to move to the island – many to avoid the uncertainty driven by the newly-elected Labour government, and what is expected to be a “painful” budget at the end of the month.
‘I’m afraid a temporary 2% rise in income tax rates does not evoke feelings of stability and certainty.
‘Guernsey, like Jersey and the IoM, needs to attract skilled workers – including teachers, nurses and carers – and despite the narrative that 80% of less well-off islanders will not be impacted by the 2% rise in income tax, the headline of a 22% income tax rate will undoubtedly put people off a move to the island when they can move to an equivalent jurisdiction at a lower headline rate of tax, and this does not even factor in social security contributions.’
Mr O’Neill accepted that the island’s finances had moved into a precarious position over a long period of time.
‘This is a budget that criticises previous committees for introducing too many short-term solutions rather than dealing with the state of the finances, but here they are proposing to introduce one of the most significant changes in the history of the island’s tax system for a temporary period. That’s not exactly long-term thinking.
‘Revenues need to be raised, but raising the headline rate of income tax, which has been sacrosanct since 1960, for two years is a bold and potentially damaging move.
‘It feels like P&R is kicking the can down the road – exactly what they are criticising previous assemblies for doing.’
