An amendment to rule out territorial tax was defeated, but the 13 deputies who voted to take it off the table were joined in spirit by several others who thought it would need to be dropped from Policy & Resources’ final tax and spending plans.
The senior committee is widely expected to favour other ways of raising more income from companies, and it became clear in debate yesterday that it is considering publishing its findings on company tax as soon as the next few weeks to help provide the finance sector with more certainty.
Nonetheless, the man leading P&R’s company tax review, Charles Parkinson, successfully persuaded the States to throw out Haley Camp’s amendment which would have immediately excluded territorial tax, under which companies would pay up to 15% on profits from business carried out in Guernsey, with an estimated effect on tax income ranging from losing £5m. a year to gaining £18m. a year.
‘We are still actively canvassing the views of companies, industry bodies and private individuals. We are in the middle of this process and it should not be stopped today,’ said Deputy Parkinson.
He told the States that his sub-committee would shortly meet Pascal Saint-Amans, a former director of tax policy at the Organisation for Economic Co-operation and Development, and wanted to have a frank discussion with him with all the company tax options still on the table.
‘The people of Guernsey have shown that they do not support GST, by majority, and P&R has promised that we will leave no stone unturned in a review of fiscal options,’ he said.
‘If we are prevented from reviewing some important alternatives, and if P&R decides to recommend a fiscal policy which includes a GST, the public will most likely reject the proposals. We will not have kept our word and the supporters of GST will suffer the consequences.’
Deputy Camp, whose amendment was seconded by Deputy Mark Helyar, claimed that discussions about a territorial system were already harming business confidence, unlike four other options for company tax reform on which P&R has also been out to consultation.
She argued that the potential additional income from territorial tax did not justify a lengthy list of risks of introducing it unilaterally.
‘Some say this decision can wait, but uncertainty has a cost today, and that is only exacerbated the longer we sustain the uncertainty,’ she said.
‘Removing territorial tax does not close the door on reform, but it restores clarity, protects competitiveness and reinforces the stability on which our entire economy and public finances depend.’
Deputy Camp’s amendment was defeated by 13 votes to 23, with her president at Economic Development, Deputy Sasha Kazantseva-Miller, being the only member to abstain.