Increasing income tax to 22p in the pound, either for a two-year period or permanently, will be put forward in amendments at this week’s States meeting as an alternative to P&R’s proposed 3% goods and services tax.
In a snapshot Guernsey Press opinion poll, closed after the first 100 votes were recorded, 58% of readers said they would support putting 2p on income tax instead of 3% GST.
P&R president Lindsay de Sausmarez and her vice-president, Yvonne Burford, told the latest Guernsey Press Politics Podcast – which is out today – that they could not support raising income tax even if the committee’s own tax and spending plan was thrown out by deputies this autumn.
Listen to a special Guernsey Press Politics Podcast, featuring two members of P&R and two prominent critics of its tax plans going head-to-head
Deputy de Sausmarez claimed that 22% income tax ‘would make everyone worse off’ and ‘have a dampening effect economically’.
‘It has been roundly rejected by the States every time it has been debated since the introduction of zero-10,’ she said.
‘One of the core problems we are trying to fix with this reform is our wild over-reliance on income-based taxation, which leaves us vulnerable to economic shocks, and that is not something to leave unaddressed.
‘Raising income tax further makes that problem worse, rather than doing what every States Assembly has tried to do for decades – reduce that over-dependency and diversify the tax base to strengthen the economy and make us more resilient.’
There were no circumstances in which Deputy Burford could consider voting to increase the standard rate of income tax in this political term.
‘I couldn’t support 22p income tax for a few reasons,’ she said. ‘It just puts so much extra cost on people on low and middle incomes.’
It has previously been estimated that increasing the standard rate of income tax 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.
The previous P&R unsuccessfully recommended raising income tax to 22% for a two-year period, coupled with adding £1,100 to the personal allowance, and estimated it would have raised £28m. a year while leaving four out of every five lower-income households better off or no worse off overall but increasing the tax burden for nearly all middle-income households.
Two of the most prominent critics of P&R’s current tax plan, which also includes new motoring taxes and real-terms cuts in public spending, told the podcast they would rather see 2p in the pound added to income tax than 3% GST.
‘I don’t think it’s a binary choice, but if I had a gun to my head it would be 22% income tax without a doubt,’ said Deputy Rob Curgenven.
‘I have supported that to be on the table [22% income tax] so I am fairly supportive,’ said Deputy Garry Collins.