Will Haegeland from the Pandora Hotel, who is also a member of the Guernsey Hospitality Association, said he is worried that the proposed new GST package would put too much pressure on his business, and impact the local industry’s competitiveness within the global market.
‘I’m against GST,’ he said.
‘I understand the need to get the island’s finances sorted. However, I do think – even though GST rates have gone down from 5% to 3% – it will lead to inflation. At that stage, we’ll have to do our normal increase in our pricing, probably around 5%, and on top of that, the 3% of GST.
‘Consider the pressure GST will have on our payroll, including the increases to minimum wage and social security, which again means we need to increase our prices further. That will have a great impact on our competitiveness in the world of travel, where people can buy Mediterranean holidays for less than they can fly over here.’
He said that many workers in the industry did not trust what States was saying on the issue.
‘They present that they’re going to try and save 1% [in efficiencies within committees] – but there’s nothing linked to that,’ he said.
‘And if they don’t, it’s just “well we tried, but we couldn’t”. I don’t think that’s good enough. We just did a survey in the GHA, and from that it is clear that I’m not alone.
‘The hospitality industry is mostly against the GST. Even though everyone understands the need for States to do something, we don’t quite trust what they’re telling us in terms of figures.
‘We want to see other ways of trying to increase revenue, rather than going to the individual and putting further burdens on the hospitality industry that is already pushed and squeezed to the brink in terms of our profitability. We’re all struggling and this won’t make it any easier.’
The GHA has stated its case ahead of next week’s States debate, which starts on Wednesday. It said the vast majority of its industry members shared an overwhelming message of concern.
‘Not simply opposition to GST itself, but concern that government should first demonstrate meaningful public sector reform, improved financial management and delivery of its proposed efficiency savings before asking islanders and businesses to contribute additional taxation,’ it said.
It added that members wanted the States to do more to grow the economy, support investment into business and improve air connectivity, which would be sustainable ways of strengthening the island’s public finances over the long term.
The industry was concerned that GST and rising employment costs would further increase operating costs, reduce competitiveness and potentially impact visitor demand.
‘Guernsey’s hospitality sector is already operating under intense financial pressure, having absorbed substantial increases in energy, food and drink costs, wages, recruitment, rents and the introduction of the secondary pension scheme in recent years,’ it said.
‘Introducing a consumption tax at a time when many businesses are still managing these significant cost increases risks weakening consumer confidence, reducing spending across the local economy and placing additional strain on an industry that plays a vital role in Guernsey’s economy.’
GHA members have various ideas on how the States could raise more revenue.
‘But what united the responses was a strong belief that improving government efficiency, restoring confidence in public finances and supporting economic growth should come before introducing a new island-wide consumption tax,’ it said.
‘The association recognises the need to secure Guernsey’s long-term public finances and remains committed to working constructively with the States on sustainable solutions. However, members believe that restoring confidence through meaningful public sector reform and creating the conditions for stronger economic growth should form the foundation of any long-term fiscal strategy.’