If higher income tax is proposed, it’s the wrong solution for Guernsey

Nearly 20 years ago he was one of our States’ leaders who said that it was vital we should maintain a level playing field with our fellow Crown Dependencies and introduce the zero-10 tax regime to prevent serious impacts from the EU blacklisting our previous exempt tax regimes. At that time, we were told that the islands would be fine because economic growth would be generated to make up the expected revenue shortfall.

The first part of that vision was achieved, and the Crown Dependencies avoided EU sanctions and while some economic growth occurred, not even Deputy Trott could have predicted Brexit and Covid and these were certainly not factored in.

Now I see that Deputy Trott no longer believes that maintaining a level playing field with our fellow CDs is vital to our existence, and that higher income tax rates would not create any arbitrage between the islands. I confess that I am somewhat taken aback by this significant about-face.

What Deputy Trott (and a large proportion of his colleagues and the general public) seems happy to ignore is that both our fellow CDs – or are they really our competitors – have a significant additional source of government revenue that Guernsey does not enjoy –GST or VAT. A quick internet search yields the information that Jersey received £106m. in GST in 2021 and the Isle of Man was predicting £356m. of VAT receipts in its 2023 budget. I completely agree with Deputy Helyar that none of us trust our States to spend wisely such extra revenue that a GST would provide but the simple fact is, that without it, there is no point in us complaining about weeds along our pavements or lack of provision of other services we each consider that government should provide. It is a travesty that Deputy Trott and his political ‘friends’ ensured that a GST did not get voted in during this States, both because they suggested it first in our previous States and that if they are completely honest with us they all know it is the solution we seek, provided it is delivered with the changes to other taxes and allowances as proposed by the former P&R. Not having that revenue source puts Guernsey on the wrong side of the ‘level playing field’. I sincerely hope that Deputy Trott is not intending to propose higher income tax rates in contradiction of his stated level playing field philosophy, but if he does, I hope our deputies understand why they should vote that down. Both because it is the wrong solution for Guernsey and because it achieves the opposite of what he claims we need, a wider tax base and economic growth. At present Guernsey is making the very people we need – experienced tradesmen, senior administrators and management in all private sectors; the most taxed and less able to make provision for their future because they get no (or soon to be none) relief on their house purchase, they cannot contribute to a pension (although at last employers have to) and we have no tax-efficient savings products as in the UK. How do we think increasing their income tax rates will improve their feeling of being valued contributors to our economy? There are many positive things about living in Guernsey, but if we continue to make being employed at the sort of salary that makes you flexible about where you can live, this island will become the preserve of those employed by the state, those on good pensions, those whose benefits give them a reasonable lifestyle, and the capital rich wealthy who pay little or no income tax. Then we will really see what a mess we are in.

ANDREW GUILLE