Tinkering with tax system now could drive away new business

That such expansion is needed is clear from the shortfall of tax revenue last year compared with States' forecasts.

The shortfall was said to be approximately £25m., almost all of it income tax.

With a tax rate of 20% that suggests the States overestimated the salaries, wages and taxable corporate profits being earned by Guernsey people and businesses by at least £125m. and, in view of the 10% tax rate on corporate profits, by perhaps £200m.

This is a very significant number in relation to Guernsey GDP and highlights the considerable over-optimism in the States about the island's economic performance.

A recent report by a leading firm of accountants on the tax options available to Guernsey highlighted the need of business for as much certainty as possible in relation to tax and similar matters.

Business gives great weight to the stability of tax regimes when looking at where to domicile a new operation. It cannot be repeated often enough that new business does not have to come here; there are many other jurisdictions competing for each opportunity.

The last thing Guernsey needs at the present time is another revolution in its tax system to bring in territorial tax or some similar variant and thereby create that very uncertainty and lack of stability.

Zero-10 may be far from perfect but it is a known quantity.

Increased tax revenues need to come from increased economic activity and not from juggling with the tax system as that may have completely the opposite effect and drive away businesses that are already here.

RICHARD BATTERSBY,

St Jacques House,

St Jacques,

St Peter Port,

GY1 1SP.