The group said that while the island wanted to build an innovation economy, there was no dedicated long-term funding set up to support it.
‘Two routes for high‑value and internationally mobile residents sit within Guernsey’s existing tax framework. Both routes are established, operate within the current tax framework and draw on revenue mechanisms already in place rather than ones that would need to be designed,’ it said.
Guernsey currently has two tax cap mechanisms in place that are aimed at new open market residents – one enables those who buy a qualifying property to cap their local tax bill at £60,000 for four years; the other is for ‘internationally mobile residents’ who become tax residents here and who can elect to pay a standard charge of £50,000 on their income from outside of Guernsey.
By comparison, Jersey’s High Value Resident programme requires an annual minimum tax contribution of £250,000. To hit this minimum, individuals are taxed at 20% on the first £1.25m. of their worldwide income, and 1% on any income over that.
Jersey also considers if applicants for its HVR programme have experience in innovative or diversifying businesses, local philanthropy or investment. Innovate suggests that Guernsey could make its own tax cap an ‘innovation contribution’ model.
New residents in the Isle of Man can opt to cap their annual income tax liability at £220,000 for an individual, or £440,000 for a married couple or civil partnership.
Innovate Guernsey said its proposal was a simple one.
‘Increase the open market tax cap modestly, review the resident-only standard charge, and ringfence part of any extra revenue for a properly-governed innovation fund.’
The group suggested that co-investment alongside capital in investable Guernsey businesses would be one use to which the money could be put.
Or it could be used to help innovation skills, training and talent development; create testbeds and pilot environments for new products and services; or to provide seed support that helps create the conditions for private sector investment.
Innovate Guernsey said it had spoken to ‘several high-value residents’ who indicated that they would accept making a higher contribution, especially if it were ring-fenced for innovation.
It also pointed out that even if the tax cap on new residents doubled, it would still be below the equivalents in Jersey and Isle of Man.
‘We’re not campaigning for a tax rise as an end in itself’
Deputies have offered a constructive response to Innovate Guernsey’s idea to look at funding innovation via the tax contribution from high-value and internationally mobile residents, said the group’s chairwoman Susan Watson.
Finding ways to fund innovation was an explicit part of its mandate, she said, and this suggestion was one of several ideas it had put forward.
Recently it had also published an insight article into the Guernsey Enterprise Investment Scheme and it was due to hold round table discussions on investor mechanisms.
The aim was to make sure the findings were picked up and followed through either by the States or the Digital Greenhouse.
‘None of it works without a funding base behind it,’ said Ms Watson. ‘Looking at where that funding comes from is core to our remit, not a step outside it.’
Its suggestion of increasing the contribution levels for high-value residents was a funding idea that was up for discussion, she said.
‘We’re not campaigning for a tax rise as an end in itself... if there is room for adjustment, could part of any uplift be ringfenced for innovation rather than absorbed into general spending?’
Ms Watson said that Innovate Guernsey had engaged with the Policy & Resources Committee about its ideas before going public.
‘I shared the paper with deputies connected to the Tax Review ahead of any wider release. The response has been constructive, and the proposal is feeding into work already under way as part of the budget process,’ she added.
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