Guernsey Press

Increasing registration duty far from being a ‘stealth tax’

WE ARE writing in response to the recent letter by Dave Beausire [E&I still milking its cash cow, 20 December] on first registration duty. First, we’d like to correct some misunderstanding over the origins of the increases.

Published

Mr Beausire has painted this as a ‘stealth tax’, imposed on a whim by the Committee for the Environment & Infrastructure, with no notice and no States’ support. This is simply not true.

The increases in this duty were included in the 2023 Budget, presented by the Policy & Resources Committee and approved by the States Assembly. As part of that, the States also approved that the increase would take effect from 1 January 2023. Also, people who can show they have purchased or ordered vehicles in 2022this calendar year but are not taking delivery of them until 2023, will still be eligible for the 2022 rate.

Far from being a ‘stealth tax’, the States of Guernsey made sure to inform all car retailers by writing to each of them, and issued a press release to help inform the wider community, who understandably won’t have followed all the detail in the budget. We understand why Mr Beausire and others are opposed to the increase itself, but we hope they would recognise that we have sought to keep them informed, openly and transparently.

The duty is based on a motor vehicle’s carbon dioxide emissions and those vehicles which pollute the atmosphere most pay the highest fee. Emissions-based vehicle taxation is standard practice in most other jurisdictions.

One of the main differences in Guernsey is that – unlike those other places – this is just a one-off charge rather than an annual charge.

The other main difference is that our rate is proportionately very low compared to comparable jurisdictions – while our current rate for the highest emissions vehicles is just £690, the equivalent in Jersey is £3,300. In the UK, vehicle owners are charged up to £2,720 in the first year for the equivalent vehicle, adding up to around £5,000 over the first six years. The rates in Guernsey have not been increased at all since their introduction in 2016 – not even to keep up with inflation – and registration data showed that the current top band had had no effect in dampening demand for these highest emission vehicles, so a significant increase was justifiable. Indeed, the increased rate for 2023 is still very much lower than the equivalent rates in Jersey and the UK and further afield.

The income accrued from first registration duty goes into the States’ general revenue, which funds Guernsey’s essential services, such as healthcare, education and so on.

Policy & Resources recommended the increase because of the growing deficit in public funding which impacts services islanders rely on. The budget sought to support those affected by the rising cost of living – and especially housing costs – through some targeted measures, including freezing domestic TRP on domestic properties under 200 and pausing the phase-out of mortgage interest relief.

But it’s of course not possible to do this and to also meet the rising costs faced by, in particular, health services, without revenue-raising measures.

So for these reasons, the increase was recommended to and approved by the States Assembly.

The increases for lowest-emitting cars or motorcycles with smaller engines are £50 or less.

That’s still a relatively small additional one-off sum when making a purchase that is going to be in the thousands, or tens of thousands, of pounds.

The new duty rates have been weighted so the lion’s share of the increases come from those vehicles that produce the most emissions. Clearly as we, along with Europe and all car manufacturers, move towards net zero, there are fewer new vehicles in the highest-emitting categories being sold. But where they are, and where they add to our carbon emissions and air pollution, they will face a proportionately higher duty.

We don’t expect the purchasers of new cars to welcome an increase, even a small one which is paid only as a one-off, rather than as a recurring tax. But we hope the community is able to appreciate the tensions that the island has to grapple with in managing economic and environmental pressures.

Deputy Lindsay de Sausmarez

President of the Committee for the Environment & Infrastructure

Deputy Peter FerbrachE

President of the Policy & Resources Committee