The improvement is largely down to increases in the income forecast from document duty on property sales, and recent international company tax changes known as Pillar II.
But Policy & Resources is still expecting an operating deficit of £2m. for 2025, which means the States continues to spend more than it generates on a day-to-day basis, and treasury lead Gavin St Pier yesterday prepared the ground for the publication next month of a ‘challenging’ 2026 Budget.
‘We must raise revenues where we can find scope, and frankly the scope is extremely limited,’ he said.
‘We have no choice but to fund essential public services and some of the pressures I have spoken about today are already being spent, so cannot be avoided, meaning we have no option but to budget for them next year.
‘However, States members and the public should also be assured that there will be initiatives to deliver savings in 2026, as well as a fresh but much-needed look at our whole expenditure budget.’
He told the States that the ETI tax income forecast for 2025 remained broadly in line with the amount budgeted, at just over £290m., but that income tax revenue overall was now forecast to end the year £9m. ahead of initial expectations.
‘This is entirely due to the reforecasting of likely revenues from Pillar II, based on the latest information available to the Revenue Service,’ he said, adding though that there was considerable uncertainty around these estimates.
‘I should stress, though, that not a penny of this tax has been banked to date and will not be until 2027.
‘Until that time, we can only estimate based on the historical data available and information from impacted entities in Guernsey.’
Despite that uncertainty, the revised forecast strengthens the position of Deputy Charles Parkinson, who is leading P&R’s flagship tax review and has consistently predicted that Pillar II company tax reforms would bring in much higher additional income than initially anticipated by previous P&R committees and treasury officials.
Deputy St Pier also reported that document duty was already £5m. ahead of the amount budgeted at the start of the year.
‘Local market transactions in 2025 are up 31% on the same period last year and 5% ahead of 2023, and if current trends continue we should end the year some £8m. ahead of the budget estimate,’ he said, while warning that document duty was ‘inherently unpredictable and quite lumpy’.
Deputy St Pier said that States spending was expected to end 2025 ‘broadly in line with budget’ but outlined overspends anticipated in two areas. The Health & Social Care Committee is now expected to overspend its budget by £2.8m., or just over 1%, due to difficulties filling vacancies and the resultant higher overtime and agency costs.
Corporate services, which fall under P&R, are facing an estimated overspend of £1.6m., driven by the increasing cost of insurance policies and digital and technology services.
Deputy St Pier delivered his financial statement to the Assembly soon after the Guernsey Press revealed that he was facing a code of conduct recommendation to suspend him from the States for 25 days.
That matter is unlikely to be debated sooner than the end of November, and therefore should not prevent Deputy St Pier leading the 2026 Budget debate earlier that month, although he did apologise to members in advance of missing the publication of the Budget on 7 October, due to a long-standing family commitment outside the island.
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