Guernsey Press

Time for a radical think on tax

THINK tanks tend to make news by coming up with rather ‘out there’ ideas. They can be useful in spelling out a problem – sometimes the solution they reach is not so helpful.


Remember the reaction when Alderney was suddenly suggested as a great option for a processing centre for asylum seekers by the Think Tank Policy Exchange? It didn’t even raise the prospect with the Alderney authorities.

Anyone reading the report from the International Sustainability Institute over the Tax Review may well feel comfortable with the synopsis. It raises economic and sustainability issues, both lacking from P&R's report. But they may be surprised at the alternative proposal – a GST of 12.5%.

This is presented as part of a ‘flat tax regime’ of 12.5% – covering personal income tax, corporate tax, social insurance and GST – including a territorial tax too, all part of a ‘radical change’ option.

This is set against a backdrop of years of public spending rising faster than the economy has grown, which, if not addressed, will continue unsustainable spending which can only be propped up by regularly increasing the GST rate towards 20%.

But it’s starting to look increasingly likely that this tax conundrum won’t be solved next week, nor any time soon. Maybe we do need a truly radical solution.