Trott – GST will need to be higher than 5% to repair States finances

The States recently agreed that the new tax should be introduced at a rate of 5% in 2027, alongside reductions in income tax and social security contributions to assist lower- and middle-income earners, and the package known as ‘GST-plus’ is set to be a major issue at June’s general election.

Deputy Trott told the States yesterday that he ‘expects’ the next Assembly to retain GST-plus as a policy, but admitted for the first time that he thought it would not go far enough.

‘I’m not sure the States’ treasurer would be pleased to hear me say it, but the problem we have with GST is that I don’t think 5% is enough,’ said Deputy Trott.

‘I think 5% balances the books in the short term, assuming it’s on everything, but to grow our reserves in the way in which the Assembly has decided a GST needs to be higher than that.’

Similar concerns were voiced last year by P&R vice-president Deputy Heidi Soulsby, who like her president has repeatedly voted against a goods and services tax. It is unclear whether their view is shared by the other members of the senior committee, all of whom previously voted for GST.

Deputy Trott hopes to set out final figures for 2024 when the Assembly meets on 5 March.

The general revenue deficit for the year is expected to be approximately £20m.

More significantly, P&R is now estimating that the next Assembly will face an underlying structural deficit in public finances of nearly £60m. a year, while having about £150m. available to spend on a list of desirable capital projects with an estimated total cost of more than £1bn.

‘The problems are significant and the rates of tax that we are considering are in my view inadequate,’ said Deputy Trott.

‘There are some other potential sources of revenue in the future, but not in the immediate future, so the problems will be with the next term of the States. Time will tell how the next Assembly deals with these matters.’

Asked by his predecessor, Deputy Peter Ferbrache, which taxes he thought should be raised and where savings could be made, Deputy Trott referred to his committee’s failed bid late last year to raise income tax to 22p in the pound for two years.

Deputy Peter Roffey, who has criticised P&R for avoiding alternative measures to raise additional revenue immediately following the defeat of its income tax proposals, asked Deputy Trott for his views on the current States leaving its successor an estimated £150m. for capital projects.

‘I think it’s a woefully inadequate sum. It’s 15% of our overall demands,’ said Deputy Trott.

‘It simply isn’t enough and that is something that I hope candidates at the general election will consider carefully.’