Policy & Resources has put back the start date of reductions in income tax and social security contributions to 1 January 2029, just six months before the next general election.
A 3% goods and services tax will be introduced even later, with treasury lead Deputy Charles Parkinson suggesting it might start around Easter, and P&R president Lindsay de Sausmarez saying it would come into effect ‘at some point’ after January.
Garry Collins, who voted against the senior committee’s plan, believed there was still uncertainty about whether the island would see it before the end of the States term.
‘Obviously it’s not over yet because there is legislation to be drafted,’ said Deputy Collins.
‘We don’t know, if we’re getting closer to 2029, whether that is going to get through because it’s close to an election.’
Voting in favour of a similar tax package in the previous Assembly, including GST, was believed to have cost several deputies their seats at last year’s election, including former P&R president Peter Ferbrache and committee presidents Andrea Dudley-Owen and Rob Prow.
Rob Curgenven, another prominent critic of the current plan who took their place last summer, believed the 2029 election could still influence the final shape of tax reform.
‘With an election coming up around the implementation, I definitely think there is room for changes.
‘And I think it will definitely affect the election,’ said Deputy Curgenven.
He said he had ‘no idea’ what the chances were of overturning GST, but while there was a glimmer of hope he would not give up the fight, despite last Friday’s 22-17 vote in favour in the Assembly.
Deputy de Sausmarez had confidence in her committee’s revised timetable but acknowledged that a policy agreed in the Assembly was not the same as it being introduced in practice.
‘I would never on any subject give a 100% guarantee that it’s going to happen,’ she said.
‘Much in the way that I wouldn’t put bets on votes or speculate particularly, I won’t believe it until I see it, but I do
have confidence certainly in the implementation timelines, and I think it’s important that we keep having conversations with colleagues and all the other stakeholders.’
Reductions in income tax and social security contributions would have to be introduced at the start of a year, for administration reasons, but there was more flexibility with GST.
‘I can’t give you a specific date [for GST]. It’s been such a crazy week in terms of information and we haven’t had a chance to sit down and look at it in the cold light of day,’ said Deputy de Sausmarez.
The longer the gap between reducing income tax and contributions and starting GST, the better off households will be financially, potentially boosting spending power.
There would be a cost to States finances, but P&R has some room for manoeuvre, having announced last week that Pillar Two company tax changes are now expected to bring in £250m. for the tax years 2025-27, compared to initial estimates of £30m. and later estimates of £120m.
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