Only two ‘targeted reforms’ will go ahead next year, if Chief Pleas votes them through.
One limits the forfait to people living in substantial properties, and the other tightens up the ‘Box 2’ relief.
‘Feedback from islanders highlighted concerns around affordability, privacy, retirement savings, inward migration and the wider impact of reform on Sark’s competitiveness,’ Chief Pleas said in an update to residents.
In response, the committees has deferred broader structural reforms to 2028 ‘to allow further analysis, detailed policy development and continued public consultation’.
The forfait lets homeowners choose to pay a higher rate of property tax in return for being exempt from some other Sark taxes. It was designed to raise significant property tax from large homes.
However, the Policy & Finance Committee and the Taxation Review Committee fear the system is open to misuse.
‘Under current arrangements, individuals with substantial means can occupy smaller dwellings and pay significantly less than the level intended by the forfait system,’ the update said. ‘This undermines fairness and public confidence in the taxation system.’
A minimum property threshold would ensure the forfait worked as originally intended.
Box 2 allows anyone living in the household of a forfait payer to pay a minimum amount of tax. It was designed mainly for spouses, partners and close family members, but the committees say it too is open to abuse.
‘Currently, multiple people in the same household can claim this, even if the household has substantial means,’ the update said. Restricting Box 2 to one claimant per household would keep the relief while preventing disproportionate use.
The report says Sark’s finances have improved in recent years but warns of costly challenges ahead. These include repairs to La Coupee, waste management, sewage treatment, harbour safety and the eventual replacement of the IOSS vessel.
The island also needs to rebuild its reserves so it can respond to emergencies and support future generations.
Further public consultation will take place before any decisions are made on the second phase of reforms.
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