Deputy David Goy secured the information from the Policy & Resources Committee while building the database for his idea of a ‘Productivity Incentivisation Tax’, which he believes can help the States to avoid the introduction of a GST.
P&R confirmed that there were between 500 and 560 households within the top 10% of TRP property values – typically houses valued at more than £2m. – whose combined income tax and social security contributions were lower than the median paid by households across the Bailiwick.
P&R estimates that about 380 of these households are pensioners.
‘In other words, P&R’s own figures appear to confirm the existence of a significant number of affluent working-age households occupying high-value properties while contributing less than the average worker,’ said Deputy Goy, who said he would look for ways to impose extra tax on these people, including punitive taxes on unoccupied houses and levies on the purchase of expensive cars and boats.
He also said that an argument that ‘the wealthy will leave’ in relation to a significant increase in document duty on transactions exceeding £2m. was ‘fearmongering’.
‘The problem is that P&R operates on the assumption that any increase in taxation on the wealthy automatically constitutes a net loss to the economy,’ he said.
‘They fail to distinguish between wealthy individuals who are economically productive and those who are unproductive, or even a net fiscal drain on the island. Furthermore, they do not consider that the current tax regime encourages the use of Guernsey property, both residential and commercial, as a vehicle for passive wealth storage rather than productive investment.’
The prospect of claiming more in TRP from people who leave local homes largely vacant over the course of the year was largely knocked back by Policy & Resources, which, he said, ‘resorted to procedural deflection rather than meaningful, data-driven policy analysis’ in response.
He believed that the evidence should be available to establish the total TRP value of these underused assets and that the absence of meaningful data on them was ‘a major blind spot’ for the committee and a missed opportunity for potential TRP revenue.
‘Policies targeting vacant properties and luxury second homes are increasingly becoming standard international practice,’ said Deputy Goy.
‘New York City Mayor Zohran Mamdani, for example, successfully secured a tax on luxury second homes as part of a broader multi-pronged fiscal strategy. That measure alone generated approximately $500m. in revenue. It demonstrates that unproductive luxury wealth can, and should, contribute to fiscal stability alongside other savings measures.
‘Yet despite these examples and the clear evidence of untapped potential, P&R continues to overlook this possible revenue stream from unproductive wealth, while instead seeking additional contributions from an already strained middle class and the productive corporate sector.’
P&R told Deputy Goy that his idea for an enhanced rate of TRP for unoccupied properties was addressed in the 2024 Budget but not supported and rescinded the following year because of concerns about its practical operability.
‘There are many reasons why residential properties might be vacant, but limited evidence. Applying a penal fiscal measure in the absence of robust data risks being ineffective or disproportionate,’ said the committee, which wants to build a stronger evidence base on vacant property which would support a more informed and targeted response.
It said the idea of a 100-times surcharge on the current TRP liability, which would equate to a charge of around £35,000 a year for a residential property of an average size, may be deemed excessive and disproportionate and could be subject to legal challenge. A surcharge set at 10 times the current value on residential property would raise about £650,000 a year, it estimated.
P&R also said it was concerned that a proposal to more than double the top rate of document duty on all property sales over £2m., which it is estimated could raise more than £7m. a year in extra tax, could also trigger behavioural change with a slump in demand or a fall in prices being paid.