Scrapping plans for a goods and services tax and instead increasing the standard rate of income tax from 20% to 22% was the most far-reaching of nearly 30 new amendments submitted yesterday.
Adrian Gabriel is proposing a temporary income tax increase for 2027 and 2028 only. A similar proposal put forward by a former Policy & Resources Committee was defeated in the States two years ago.
John Gollop wants to go further and is proposing setting income tax at 22p in the pound permanently and telling Policy & Resources to introduce the new rate as soon as possible.
Would you support a 2p rise in income tax instead of 3% GST?
The new amendments submitted by 3pm yesterday will be added to those which remained when the States Assembly failed to complete its landmark tax and spending debate in July.
In total, about 40 amendments – believed to be a record for a single debate – are likely to be in play when the Assembly resumes next week.
Other amendments lodged yesterday included one to exclude social insurance benefits, such as the States pension, from a draft policy to freeze public spending, a proposal to hold GST at 3% until the States has made further efficiency savings of at least £20m. a year, and a request for P&R to investigate an overhaul of property taxes.
‘GST is unpalatable to most of the public,’ said Deputy Gabriel.
‘Those in employment or subject to taxation on income would rather see an increase to the existing method of taxation by [2p in the pound] than a GST implemented.
‘The proposal is that there is a two-percentage point increase in income tax for the period 1 January 2027 until 31 December 2028.’
The standard rate of income tax has been 20% for more than 60 years.
It has previously been estimated that increasing it to 22% would boost States revenue by about £35m. a year.
That would raise more than GST at 3%, in the form proposed by P&R, but only by also scrapping the senior committee’s plan for substantial reductions in income tax and social security contributions which it has shown would leave the least affluent half of the island better off or no worse off overall.
Deputy Gabriel, whose seconder is Deputy Garry Collins, said he wanted to see a ‘stop gap to ease immediate financial pressure’ on the States, while waiting a couple of years to see how much was raised by Pillar Two company tax changes before revisiting the need for any further reforms.
His amendment also proposes an investigation by P&R into raising the tax cap used by some wealthy individuals who live in the island.
Deputy Gollop said that raising income tax was ‘a more acceptable option for many members of the public’ than introducing GST.
He believed it would be possible to increase income tax ‘perhaps a year earlier’ than it would be feasible to start GST, and said that was another benefit.
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