The Policy & Resources Committee has moved early, before any chance of introducing any corporate tax reform, which is due to be debated at the end of June, so it can have the package ready to go if backed by States members.
‘In no way are we pre-judging either our final recommendation to the Assembly, or its decision,’ said P&R vice-president Gavin St Pier.
‘No final decision has been made on any of the tax reform options the States may ultimately decide to implement. However, the previous States directed that preparatory work on the implementation of the GST plus personal income protections package of measures be continued, pending a final decision of the States.
‘As part of the preparatory work taking place, we need the States to decide some of the detail of what that package of measures includes so that it could be introduced without further delay, in early 2028, if the Assembly decides to include it as part of the final proposals on tax reform.’
Deputy St Pier said that the totality of its proposals, if supported by deputies, would actually leave less well-off islanders in pocket. ‘Taking all the measures together in this tax reform package mean that most people earning less than £50,000 a year will be better off,’ he said.
‘60% of the net revenue raised in this tax reform package would be from sources other than local households, such as the corporate sector and those visiting the island.’
The tax package includes cutting the standard rate of personal income tax to 15% for those earning less than £32,400 a year; introducing a social security allowance; a 5% GST on most goods and services; increases to pensions and benefits; introducing a new relief to support low-income households who do not claim income support; all backed by a legal guarantee that would require the States to raise these allowances if it ever looked to increase the standard rate of GST.
P&R has looked at but rejected the idea of exempting food from a goods and services tax, and instead charging 6% on all other transactions.
‘Our recommendation to the States is that a consistent lower rate including food is the best and most efficient approach. It is the clear preference of the business community,’ said Deputy St Pier.
‘The detailed analysis we have undertaken, shows that zero-rating food while having a higher rate of GST on all other goods and services does not in fact result in lower overall costs for low-income households.’
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