‘GST will become an ever-increasing burden’

It’s become increasingly obvious that P&R simply doesn’t care about the welfare of the local residents of this once lovely island.

It only goes to show their inability to look beyond GST, as they continue to stick to it like glue. And while doing so push aside all other ideas and suggestions which everyone else can plainly see are far better for the island. Introducing GST will be an extremely harmful step and will bring more pain and suffering to the worst off.

Guernsey no longer feels like the home that I grew up in. Too much outside influence and interference have been allowed to creep in unchecked. Such can be seen in the decisions made and the new laws that have been implemented by the States. Most of which have been to the detriment of island life.

And now GST. If introduced, GST will become an ever-increasing burden. Whatever is said to get GST passed in the States will be no more than a shadow of the States’ true intentions.

Once introduced, the States will look again at the percentage and consider raising it. To begin with, the States might not introduce it on food items, but how long will that last? Just think of the way that they have used taxation on fuel, increasing it to make up for losses elsewhere. GST will eventually cover everything. Add that to your utility bills, your house insurance, your car insurance. The potential income for the States through GST is unlimited.

Each time prices go up, whatever percentage the SoG places on GST,will reap a greater amount. The percentage might not increase, but the amount from which it is taken will. Which means the amount that is paid in GST becomes ever greater. And we all know that once introduced the SoG will change the agreement under which it was introduced and it won’t ever be in favour of local residents.

And not forgetting the immense cost of implementing GST. The cost to the States, the businesses, all of which is then passed on to the client, us.

What is wrong with revisiting income tax, introducing an additional tier, increasing taxation on the high earners who enjoy a ‘tax cap’, upon reaching a certain amount of income? One that results in them paying less than the 20% in the pound the rest of us pay.

Then, there’s corporation tax. Sorry, that’s another no, no.

Cutting back on States overspending? No, that’s too difficult. We simply must overspend, especially on the things we don’t need. We’re not held accountable, so we can waste as much of the island’s money as we like.

Yes, it must be great playing Monopoly with the island’s money. It’s a great shame that the SoG don’t get the ‘Go straight to jail’ card. That might stop them in their tracks; and make them think.

If only the States was run by those who had a sense of business, but sadly it’s not. Instead the island’s workers are treated as if their job in life was to continuously bail out the States’ ongoing incompetence and inability to do the job. If the States of Guernsey was a business, they would all have been sacked.

It’s a great shame that it isn’t run like a business, especially when you look at the States subsidiaries such as Guernsey Electricity. Another States department that uses the local population to bail them out. Blow up a power cable – we’ve got that covered. Up goes the price of electric to cover that. No provision made for infrastructure now or for the future. Again, we’ve got that covered. And it’s not just the price of electricity, but the standing charge as well.

Where do the States of Guernsey and Deputy Ferbrache expect the average person to keep finding the money to finance the continual overspending and to make up for their ongoing shortcomings?

The real answers to the island’s black hole is to be found in income and corporation tax. Let’s just take a look at the ‘tax cap’, and how that works and at what point it is triggered. If you want to look at the full details visit: https://gov.gg/taxcap where you will find these examples.

Cap on qualifying income:

Example: Mr A is resident in Guernsey and has the following qualifying income. Total £1,065,000.

If the tax cap was not applied Mr A would need to pay tax of £213,000 (£1,065,000 taxed at 20%, no personal allowances would be available as income is over £90,000, the limit for the withdrawal of personal allowances for 2023).

With the cap applied, his tax bill would be:

Qualifying income – tax capped at £150,000.

Non-qualifying income £15,000 taxed at 20%: £3,000.

Total tax due £153,000 which equates to an income tax rate: 14.4% and with the tax cap in place an income tax saving of £60,000. And to top that off, all further income for that tax year is exempt from taxation.

Why was it also considered necessary to set the tax cap below the amount of tax payable on the total amount? It’s not as if Mr A is going to pay any further income tax, even if he went on to earn another £50m. in income. Mr A also pays 5.6% less income tax per pound based on these figures which are provided by the States’ own website.

Cap on qualifying and non-qualifying income:

If you have a high level of income from both in and outside of Guernsey, or just Guernsey income, then the maximum tax that you pay is capped at £300,000 for 2023 (£260,000 for 2022) (but this does not include income from land and property in Guernsey or income derived from Guernsey pension/annuity schemes in respect of triviality payments or lump sums above the tax free limit. Tax is due on this income in addition to the cap).

Example: Mr B is resident in Guernsey and has the following income:

Qualifying income £1,000,000.

Non-qualifying income £694,000.

Total £1,694,000.

If the cap was not applied Mr B would pay £339,000 (£1,694,000 taxed at 20%, no personal allowances would be available as income is over £90,000, the limit for the withdrawal of personal allowances for 2023).

With the cap applied, his tax bill would be:

Qualifying and non-qualifying income – capped at £300,000.

Tax on Guernsey rental income £19,000 at 20%: £3,800/

Total tax due £303,800 which equates to an income tax rate: 17.9% and with the tax cap in place an income tax saving of £35,200. And to top that off, all further income for that tax year is again exempt from taxation.

Why was it again considered necessary to set the tax cap below the amount of tax payable on the full amount? Again, neither Mr A nor Mr B are going to pay any further tax no matter what their additional income amounts to.

When you look at income tax paid, pound for pound, those who trigger the tax cap pay less than the 20% those on lower income pay. Then if you take into consideration any additional income pound for pound, that percentage drops still further until it becomes almost meaningless.

I have no argument against a tax cap, such high income is often generated by those who provide jobs, start businesses and are the future innovators and in that at some point they deserve a tax break. After all, for some such investment can be a costly business. However, to reduce the amount in the pound paid at the point at which no further taxation on income is reached is senseless. The tax cap should only be placed on additional earnings, not the earnings proceeding the tax cap on which the full 20% should be paid, just like the rest of us.

I think that the tax cap is introduced too early. Instead, introduce an income tax percentage curve that drops down until it reaches a certain point further down the line at which the tax cap is implemented. So a tax break is still brought in at the current point, just not a full stop.

It might also help if the States stopped ex-communicating each other and instead were open to all suggestions and actually learnt to communicate with each other and at the same time actually listened.

Party politics has no place in Guernsey.

Say no to GST.

John De Carteret

17 Delancey Court

Rue Des Monts

St Sampson’s

GY2 4HX