A goods and services tax due to be introduced in 2029, after it was approved by the States on Friday, will be coupled with substantial reductions in income tax and social security contributions.
Policy & Resources Committees in the current and previous Assembly developed their ‘mitigations’ idea as a way of protecting lower- and middle-income households while raising more money for public services and diversifying the island’s narrow tax base.
In Jersey, GST has been in place for 15 years, initially at 3% and now at 5%, and politicians there were said to be closely following last week’s vote in Guernsey.
‘One of the things which was not mentioned in debate was that I think Jersey is now going to have to move and amend its own approach to GST because there are not any mitigations in place in Jersey,’ said Mark Helyar, who was P&R’s treasury lead in the previous States term.
‘I know from discussions with senior politicians in Jersey when we first formulated these ideas that they felt they were likely to gain quite a lot of momentum in Jersey because GST is a regressive tax in its standalone form.’
Matt Fallaize spoke to Deputy Mark Helyar outside the States following Friday’s vote
Deputy Helyar was one of several States members whose position on GST has evolved in recent years – from being opposed to supportive – but might not have without the twin-track development of reductions in income tax and social security contributions.
Under P&R’s plan, the personal income tax allowance will be raised by £600, the basic rate of personal income tax will be cut to 15% on income up to £28,000 a year, and a new personal allowance will be applied to social security which will effectively make the contributions rate 0% up to earnings of just above £11,000, albeit the rate after that allowance will climb to 8.5% for employees and 14.5% for the self-employed.
An individual in employment earning £40,000 would be left better off by about £1,200 a year, whereas paying GST of £1,200 a year would require spending £40,000.
P&R has estimated that its package, which also includes new motoring taxes, more revenue from company taxes and £20m. a year of public spending reductions, will improve States finances by about £55m. annually.
Deputy Helyar was expected to vote against P&R’s proposals, but he decided to back them once an amendment had been approved setting a pathway for GST to rise to 5% in 2033, alongside further reductions in income tax and social security contributions, making the package very similar to the one he proposed to the previous Assembly.
‘I stood back from it and put a cold towel around my head,’ he said.
‘I looked at the amount of work I did putting that package together, and the number of people who lost in the [2025] general election, and the fact that people must have voted for me knowing my views about GST.
‘I felt it wouldn’t be right for me to throw away all that work and also go against my manifesto, and not to do what I think is the right thing to do.
‘I still think it’s the fairest way of raising money. I’ve got my doubts about the detail, but I didn’t think the detail made it worth throwing the whole thing out.’
Deputy Helyar regretted that it had taken several years to agree a tax reform package, as the island had missed out on ‘four or five years of funding which could have built a new hospital or a school’.
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