The senior States committee published an update on its tax reform work yesterday, which is looking at GST and various options and has a separate sub-committee looking at corporate options.
Although deputies agreed at the end of February not to remove territorial tax from future considerations, the tax review sub-committee, which includes independent tax experts, met again last week and decided to take it off the table altogether.
It is a move that is sure to please the island’s financial services industry, which was concerned about the competitive threat that territorial tax might have posed, but not sub-committee chairman Charles Parkinson, who has steadfastly pursued the idea as a revenue-raiser for the island for years.
‘I continue to believe that corporate tax reform can play a significant role in what we ultimately recommend to the States in the summer,’ he said.
‘There is an expectation from the public that businesses pay their fair share of tax, but this must be in a way that doesn’t affect our attractiveness as a good place to do business.
‘To that end, the sub-committee has agreed that territorial tax will not form part of our recommendations to the rest of P&R. While on a personal level I continue to believe in its merits, I accept the need for the sub-committee to narrow the options it’s considering, and now is not the right time.’
Two weeks ago deputies rejected Deputy Haley Camp’s amendment to move on from territorial tax by 23 votes to 13, though several expressed doubt that the proposal would go anywhere in the final considerations.
P&R has maintained to continue to monitor international developments in corporate tax and the island’s future approach.
The updated timeline for the Tax Review will see Deputy Parkinson’s sub-committee report to P&R in mid-April. Its recommendations will be published and it will hold public events to discuss its findings.
‘Transparency of this work is something that I have championed from the start, and this will be the right time to show our working,’ said Deputy Parkinson.
P&R will publish its final proposals, which might include a goods and services tax, in time for a States debate in July, and its president and vice-president will host another Facebook live-stream to answer questions from the public.
Deputy Gavin St Pier, as its vice-president, said that the committee was still not pre-judging anything as it moved towards its final recommendations.
‘Our focus continues to be on ensuring the States can make a fully informed set of decisions to ensure fair tax reform. We are also committed to expenditure restraint and, where possible, reduction too.
‘Our committee is considering options so that no stone is left unturned.’
