Where did the data come from for an estimate of £41m. consumption tax expected to be realised from households?
P&R said that total annual household expenditure subject to GST is estimated at £1,358m., with the figure taken from household income data from 2017 and 2022, the most recently published, adjusted for 2026, a household expenditure survey undertaken in 2018/19, and the rolling electronic census.
How does P&R assume £5m. from visitors?
Visitors are estimated to have contributed around £151m. to the island’s economy in 2025. Applying 3% GST to this expenditure, and allowing for some inflation on the 2025 estimate, suggests potential revenue from visitors of £5m. a year
How many businesses are expected to exceed the registration threshold and be required to register, and how many trading businesses are expected to fall below it?
Approximately 1,700 businesses are expected to exceed the threshold and be required to register for GST, and would not be expected to register as an International Service Entity, a scheme which allows finance businesses with international clients to pay a fee to prove that suppliers are not charged GST on their inputs. These account for over 97% of aggregate business turnover.
These estimates are derived from a combination of Revenue Service data on registered companies and the data obtained from the Covid business support scheme.
What is the expected reduction in consumption following introduction of GST?
‘The lower rate of GST presented in the proposals is also expected to result in less behavioural change than the previous proposals,’ said P&R.
‘No explicit allowance has been made for either a reduction or an increase in consumption following the introduction of a GST at 3%,
‘But it is anticipated that there will be a temporary shift in spending decisions on high value items around the time of the implementation, with households bringing forward major purchases to complete before the implementation of GST, with a corresponding dip in consumption of these items in the month following implementation.
‘This impact is expected to be temporary. Engagement with pan-island businesses confirms that this was the experience in Jersey.
‘On an ongoing basis, consumption of high value, non-essential goods and services may see a marginal reduction. However, this type of expenditure is typically undertaken by high income households who are less price sensitive and less likely to be deterred in response to GST at 3%.’
Are you worried about the viability of some businesses following the introduction of GST?
P&R said it had engaged with a range of industry bodies, including in retail, hospitality and tourism.
‘While a small number of small entities have expressed concern about the ongoing viability of their business in the context of this policy, the engagement process did not indicate the potential for a significant loss of businesses.’
What will you do about public sector pay awards once GST has come in? Will they have a real-terms pay cut?
P&R said that pay talks for 2028 would not start until mid 2027 at the earliest.
‘While negotiations with unions around pay typically use RPIX as a benchmark, the States as an employer is not obliged to offer pay increases matched in full to inflation,’ said P&R.
‘The committee notes that many States of Guernsey employees, like other residents, would be compensated for the introduction of GST by the income tax and social security changes included in the overall package and this will be a consideration in negotiations.
States employees will benefit from the reductions in their direct tax liability like any other employee.
‘For many, including most of those on lower pay grades, they are likely to see a real terms increase in their take-home pay as a result of these proposals which will outweigh the additional cost of GST they might incur.’
What were Jersey’s ISE fee receipts that were used by P&R for benchmarking purposes?
The States of Jersey received £13.4m. in International Services Entity fees in 2025, with fees ranging from £300 to £78,300 depending on the type of entity.
Is it true that you are considering taking GST up to 5% within two years of its introduction or raising motor taxes again?
‘The intention of presenting a lighter package of measure is to both reduce the risk of economic shock from applying too much change in one go, and to recognize that there is still some significant uncertainty around some key elements of the States finances – particularly in relation to the medium- and long-term receipts from Pillar II and the future risk and opportunities from factors like AI and offshore wind,’ said P&R.
‘The initial rate is protected until after the 2030 review, so would remain at this level for until then. We have never indicated that GST could rise to 5% within two years of implementation as that is clearly not the case.
‘The inclusion of a review in 2030 is intended to allow the next Assembly to consider both the progress of any measures implemented and the developments in other areas.
‘It may or may not be necessary to consider a further increase in the GST rate to 5% or other changes to the tax base at that time, but that consideration will fall to the next Assembly, and any changes made would not be within two years of implementation.
‘If a future Assembly does consider it necessary to change the standard rate when that review reaches the States in 2030, implementation of those changes would occur no earlier than 2031.’
All questions and answers are summarised from the originals.