The showdown – 2p on tax or 5% GST

Deputy Peter Roffey will lead an amendment at next month’s Budget debate which he said would be ‘identical or very similar’ to the tax package put forward by the previous Policy & Resources Committee and rejected by the States.

The amendment will include GST at 5% from 2027, coupled with a range of measures to assist the least-affluent half of islanders, including a 15% band of income tax on earnings up to £30,000 a year, and new personal allowances free of social security contributions.

Technically the States may be able to vote for P&R’s Budget proposal for a temporary 2p increase in income tax in 2025 and 2026 and the amendment for 5% GST from 2027.

But Deputy Roffey said yesterday that he would put forward the ‘GST-plus’ package as a better long-term plan than putting up income tax to 22%.

‘No measures to raise more money from our community will be welcomed, but some are less bad than others. The carefully thought-through fiscal package, worked up painstakingly during the first two years of the political term, is greatly superior to the apparently knee-jerk proposals in the Budget.

'It is not only a much fairer alternative, but a far more effective and less damaging alternative.

‘Compared to the original GST plan, the proposal to put up income tax raises less revenue for public services and infrastructure, takes more money off people who can least afford it, and risks Guernsey’s competitive position with a higher headline rate of tax.’

P&R’s proposal for a temporary increase in income tax would be expected to raise an additional £28m. in each of the next two years.

The amendment’s ‘GST plus’ package would be expected to raise an additional £50m. a year permanently.

Company tax changes known as Pillar II, which are expected to raise at least £30m. a year in additional tax receipts, would apply under both P&R’s income tax plan and Deputy Roffey’s GST package.

The various tax plans will be debated at the States’ Budget meeting which starts on Tuesday 5 November.