The CGi, which largely represents manufacturing and industrial businesses, has long been an opponent of a goods and services tax.
It carried out its own research in opposing GST when first mooted which was heavily leaned on by other opponents of the proposition. It agrees with the Guernsey Retail Group that measures to stimulate economic growth, along with reductions in public spending, would be preferable to address the island’s structural deficit.
‘If GST is introduced, it should be accompanied by measures that encourage investment, strengthen consumer confidence and stimulate economic growth. We also believe expenditure restraint should precede any new taxation wherever possible,’ said CGi president Gavin Dart.
The business group also criticised the decision of three groups, largely from the financial services sector, who broke ranks to support GST in the run-up to this week’s debate. The others have maintained opposition to the new tax.
The CGi has also supported an increase in income tax rather than the introduction of GST, saying it would be a more straightforward move for the States to introduce.
‘Deputy Parkinson advised the CGi in May that a 1% increase in the rate of income tax would raise £5m. annually. Had this been increased by 3% three years ago, cumulative additional revenue by 2026 would have reached £45m. and made a significant contribution to narrowing the funding gap,’ said Mr Dart.
‘Income tax alone is unlikely to address every aspect of the island’s funding challenges. It remains, however, an effective and straightforward mechanism. The collection systems already exist, changes can be implemented quickly and rates adjusted without creating an entirely new tax administration.’
Mr Dart said that many people doubted whether the States could introduce a new tax system through the troubled Revenue Service, which still is addressing a backlog of more than 20,000 assessments.
‘This is the perfect storm. Given the challenges and cost overruns experienced with projects such as MyGov, Agilisys and the redevelopment of the PEH, islanders would inevitably question the States’ ability to deliver another major infrastructure system at this time.’
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