Accountant Diane de Garis, treasurer and taxation lead at the Chamber of Commerce, pictured, said that the States vote for a tax package including a goods and services tax expected to be introduced in 2029, gave confirmation for businesses which was ‘huge’ – whether they were in favour of the tax or not.
‘From a Chamber membership point of view, everyone was consistent with that, that we need a decision and we need to be able to plan. Even those who are anti-GST, they could see that there was still a need for a decision and just to know where we are,’ she said.
Mrs de Garis said that Guernsey needed a broader tax base and that she had not seen a better alternative to GST put forward.
‘Historically, we’ve had very few levers to raise additional revenue, so Social Security contributions and commercial TRP have been repeatedly increased, often without anything like the scrutiny GST has received,’ she said.
‘In 2021, the States agreed a 10-year programme of annual Social Security increases, well above inflation, with relatively little debate about the cumulative impact.
‘Those increases add directly to the cost of employing people, and personally, I think that has a far greater impact on many local businesses than GST itself.
‘If we don’t invest in our island, we don’t have enough money, and we’ve got this massively reducing working population, what would income tax rates be on my kids in the future?
‘I need this to be fixed for my children. My son is an apprentice electrician – he will benefit from the package and will be better off and I was explaining that to him, but equally, it’s not just the now. In 10 years, if we didn’t do it, would you be paying 30% tax plus high social security? I don't think we are now a low tax jurisdiction for our working population.’
That said, Mrs de Garis accepted the concerns raised about GST.
‘GST will inevitably bring some additional administration for businesses. They’ll effectively become tax collectors for the States, so they’ll need to make sure the GST they collect is available when it’s time to pay it over,’ she said.
‘But I don’t think the administration needs to be as daunting as some fear. Modern accounting software can handle much of the GST process, and for businesses still using older systems or manual records, moving to digital accounting could bring wider benefits, including better financial information, improved efficiency and greater visibility over cash flow.
‘My bigger concern is making sure the States make compliance as straightforward as possible, particularly for smaller businesses, and that GST refunds are processed promptly. For businesses with tight cash flow, delays in getting money back could be a real issue.’
As well as the additional administration, there are concerns around services that will be exempt. Mrs de Garis used childcare as an example of a business sector where costs will increase, but parents sending their children to nurseries will not pay GST.
‘At the moment, the proposal is for childcare to be exempt from GST. On the face of it, that sounds positive because parents won’t be charged GST on their childcare fees,’ she said.
‘But exemption isn’t the same as zero-rating, and that’s a really important distinction. If childcare is exempt, nurseries can’t reclaim the GST they pay on their costs, such as commercial rent, utilities and other expenses. That could particularly affect larger nurseries with significant overheads, leaving them with little choice but to absorb those costs or increase their fees.
‘I believe that childcare should be zero-rated, not exempt. Parents would still pay no GST on childcare fees, but nurseries would be able to reclaim GST on their business costs.
‘If the objective is to protect families from higher childcare costs, zero-rating is a much better way of achieving that.’
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