He had been virtually a lone voice arguing for years that treasury officials and industry figures had significantly understated how much additional revenue the States would receive from the new international company tax regime.
He told the Assembly that the revised baseline estimate of £93m. a year – or £251m. over three years, once some business relocation has been taken into account – was the treasury’s first Pillar Two figure in which he had a reasonably high level of confidence.
Previous official estimates had ranged between £10m. and £40m. a year, which Deputy Parkinson had criticised as tens of millions of pounds too low.
‘I have been very critical of figures on Pillar Two forecasts for years and I have consistently said that they are underestimated,’ he said yesterday.
‘I stand before you now and for the first time I can say these are figures I can believe in.
‘I have been pretty consistent on my views about what Pillar Two would produce, and I am also consistent on the point that ultimately that doesn’t take away our fiscal problems. But it does help us in the short to medium term.
‘It puts us in a better place than we were and it gives us more freedom of manoeuvre.
‘But it doesn’t change the fundamental point that we need to reform our tax system.’
Pillar Two changes came into effect in January 2025. The number of affected companies leaving Guernsey since then had been relatively low, much closer to Deputy Parkinson’s initial expectations than forecasts made by treasury officials and many industry figures.
Jersey, which introduced Pillar Two slightly differently, had recently received its first payments for the tax year 2025, which Deputy Parkinson said had provided ‘real-world evidence for the first time’ about how business had responded to Pillar Two.
Jersey’s actual tax receipts had informed Guernsey’s recalculated estimates.
However, he warned that they remained ‘high-level, indicative figures requiring further testing and validation’ and asked the States not yet to treat the anticipated windfall as ‘cash in our pocket’.
He also announced that Policy & Resources would shortly propose ring-fencing some of the additional Pillar Two receipts to help encourage economic growth.
‘In the upcoming 2027 Budget, the committee will be proposing a new Economic Growth Fund to help Guernsey remain competitive, productive and attractive as a place to do business,’ he said.
‘Once actual Pillar Two receipts are known and we have greater certainty over the revenues, the committee will look to increase the level of funding available.’
He said the proposed new fund would focus on finance industry growth, early years costs, improving skills, productivity and participation in the workforce, and the affordability of housing.
Further details are likely when the 2027 Budget is published early next week.
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