Basic rate taxpayers are worse off here in Guernsey

Sir

RICHARD DIGARD raised a number of interesting points on island taxation and the already high cost of living here compared with the UK [A wealth of deputies, Friday 6 August]. He quotes food up to 30% more expensive, electricity 36% higher, building work 30 to 40% more expensive (even with 20% VAT charged in the UK), and average property prices higher.

On top of this, islanders have to cope with the high cost of travel to the UK in order to connect to holiday destinations.

Mark Helyar talks about imposing a 3% health tax bringing the rate of tax to 23%. He ignores the fact that pensioners already pay a 3.8% social security health tax on top of income tax.

Guernsey, this apparent low tax jurisdiction, is already non competitive with the UK for basic rate taxpayers.

Pensioners in the UK pay no national insurance and can earn up to £50,270 with a tax rate of 20%, after a tax-free amount of £12,570. The median rate of tax is therefore 15%.

As a comparison, a pensioner in Guernsey will pay a median rate of tax, inclusive of social security, of 19% assuming earnings of £50,270.

By adding a further 3% the median rate of tax will be 21%, some 6% higher than the UK.

Add to this the cost of living and the equivalent of a basic rate taxpayer here in Guernsey is much worse off.

Gerald Hough

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