Gpeg said the sector was already being ‘squeezed on all sides’ and that a 3% GST could be the straw that breaks the camel’s back in some cases.
‘Guernsey’s tourism industry will suffer a triple whammy if the tax reform proposals don’t make an exception for hotel and tourism operators,’ it said.
Gpeg said that the sector was already being hit by increases to the minimum wage, due to rise to £13.10 an hour from October, which has increased 9.2% over the past two years, recruitment costs, utility costs and secondary pension contributions, and would face increased social security costs and GST potentially from 2029.
‘GST of 3% will hit the bottom line for hotels because they won’t be able to increase their room rates any further – they are already finding it difficult to compete with Jersey and other tourist destinations. Unless hotel operators are given dispensation to be able to zero-rate their rooms under GST, the island should be prepared for a number of these businesses closing down.’
According to Gpeg, the local tourism industry understands that if hotel rooms were exempt from the new consumption tax it would reduce the amount of income generated for the public coffers, but said the sector would be willing to contribute through a different form of taxation instead.
‘The tourism industry recognises that a dispensation to zero rating would have an impact on the amount raised in total from GST. However, instead they would prefer a modest tax on profits. This, they say, would provide better certainty, support forward planning and encourage continued investment. The tax reform proposals need to recognise the resilience and contribution of Guernsey’s tourism sector.’
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