Pillar II company tax changes, originally thought to be worth £10m. annually, are now expected to raise £40-45m. from next year.
The difference in the figures is equivalent to more than half of the additional net income in the GST-plus package agreed by the previous States but now being reconsidered.
Policy & Resources president Lindsay de Sausmarez told the Guernsey Press she was ‘hopeful’ that a new review of tax options would find an alternative to GST and said she would prefer the deficit to be dealt with by further changes to the company tax regime ‘if it can be done safely’.
Listen to a full interview with P&R president Lindsay de Sausmarez on the Budget and the tax review on the latest Guernsey Press Politics Podcast
‘I have long been concerned that since the introduction of zero-10 too much of the tax burden has fallen on the shoulders of individuals,’ said Deputy de Sausmarez.
‘The balance fundamentally shifted at that time.
‘People are really struggling. I hear so many stories anecdotally about the way in which that manifests and it’s not looking good for Guernsey’s future.’
She praised the quality and speed of the latest review of alternative tax options, which is being led by Charles Parkinson and a team of specialists.
She would not be drawn on its recommendations, which will go to the States Assembly in the first half of next year, but said that company tax reform was the only realistic alternative to GST to do the ‘really heavy lifting’ in any tax plan to return public finances to surplus.
‘I wasn’t persuaded that every stone had been turned over in order to make absolutely sure that GST-plus was the best option,' she said.
‘The election proved to an extent that the community was really not persuaded and that is why we are doing this bit of work.
‘We absolutely recognise the sensitivity around this.
‘We need to be a competitive jurisdiction and provide certainty and clarity for businesses and we want to remain a welcoming and vibrant economy for people to do business.
‘It’s absolutely essential that we get that right.’
During the previous States term, Pillar II income was estimated initially at £10m. a year and then at £30m. a year. Deputy Parkinson consistently argued that the figure would be many millions of pounds higher, and Deputy de Sausmarez said that he was being proved right.
The States’ existing policy is for GST-plus to be introduced in 2027 unless deputies agrees an alternative tax package in the meantime. But all five members of P&R have voted against GST-plus every time it has been debated by the Assembly.
‘We are absolutely committed to doing the work to explore what potential alternatives there are,’ said Deputy de Sausmarez.
‘I am confident that the work will be of good enough quality for us to have a really informed debate. And ahead of the States debate, there needs to be another community debate... it’s important that the process we’re going through now is very mindful of bringing the community into that conversation.’
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