P&R wants to scrap the introduction of a 5% goods and services tax during the current political term, and possibly for years to come, although it is not ruling out consumption taxes in some form.
It will also propose scaling back increases to social security contributions, especially on employers, which have provoked opposition from business groups.
Taxes would increase less overall in P&R’s revised plan than they would in the GST-plus package, now being called workstream one of the current Tax Review, and more time would be allowed to see how much of the projected deficit in public finances could be closed by local and international changes to the company tax regime, spending reductions within the States, and transport taxes, now known as workstreams two, three and four, respectively. The change in policy direction was intimated in a guarded but significant statement released by the senior committee yesterday afternoon, ahead of the publication of its final proposals on 8 June and a States debate in mid-July.
‘There is currently an understandable assumption that we will simply recommend the implementation of the original GST-plus package,’ said P&R president Lindsay de Sausmarez.
‘Having looked at a range of different variations and approaches, though, we are developing what we believe is a more balanced blend of measures that draws from each of the different workstreams and responds proportionately and pragmatically to the issues helpfully raised by the community.’
GST at 5% is currently scheduled for introduction in 2028 to raise an estimated £70m. a year, alongside the ‘plus’ elements to assist less affluent taxpayers which are expected to reduce the net additional revenue raised to about £50m., to help deal with an annual black hole in States finances previously projected to reach £100m.
But the current P&R is more sceptical than its predecessors about the size of the deficit and will ask the States to replace GST-plus with a tax package featuring smaller and more incremental changes.
Four of the five members of the senior committee opposed GST-plus throughout the previous States term and were known to be doubtful that they could carry enough public support and win a majority for it when the Assembly holds its landmark tax and spending debate in July.
‘Input over the last few months from experts like the [corporate tax] sub-committee panel, industry feedback and, perhaps most importantly, people in the community has given us a much deeper understanding of the potential advantages and drawbacks of various different options,’ said Deputy de Sausmarez.
‘We are responding to the legitimate concerns raised with a package that we believe finds the right blend of measures for this moment in time.’