‘We want people’s views on tax reform’

There are very few subjects that are more important to the long-term prosperity of a community than establishing a stable tax system to support our public services. I start with that statement because I really want people to engage with this topic in a more informed and nuanced way than simply not wanting to pay more tax.

I of course completely understand that position, as no one (business or individual) wants to pay more, but this is about ensuring Guernsey has a fair and sustainable tax system that allows us to protect public services that we all rely on, plan confidently for the future and support the economy. The stakes don’t get much higher than that. That is why the Assembly must reach a final decision on tax reform by the end of June this year, and why I am chairing the Tax Review sub-committee charged with reviewing the options.

We are primarily engaged in examining options for reform of our corporate tax system as an alternative to, or in conjunction with, the introduction of GST-plus. There is a parallel workstream, chaired by Deputy Gavin St Pier, which is developing plans for the introduction of GST-plus, and the States will ultimately have to choose between these options, or some combination of both. Additionally, it’s worth highlighting that there is also another programme of work looking at how the States can save money by reducing costs, with a target of £4m. in savings for this year.

The sub-committee which I chair was established at the beginning of September, so we have been working on this project for nearly four months. In these early stages, we have mainly been engaged in gathering information and consulting with stakeholders. Most of the consultees have been representatives of the business community, but in the new year we will be seeking more input from the general public. As we enter 2026, we are starting to develop some parameters, but awaiting receipt of some key information.

As a general comment, the detailed level of information is not always where we’d want it to be, for example on corporate profits. Over the next few months we will be able to get a better idea of the likely income stream from the Pillar II tax regime that affects large multi-national enterprises, including whether such organisations are responding to this new tax by moving away. However, it could take years for the full picture to become clear. At this point, the most recent projections for the final 2025 States of Guernsey financial position show a smaller overall deficit than initially projected. This is in part because the estimated revenues from Pillar II have been revised upwards, reflecting additional feedback from multi-national enterprises, and in part because the housing market has been substantially more active in 2025 than it was in 2024 which has boosted document duty receipts.

2026 will be a pivotal year for the tax systems of the British Crown Dependencies. There will be general elections in both Jersey and the Isle of Man, and tax reform is sure to be an election issue in both of our sister islands.

2026 will be a pivotal year for the tax systems of the British Crown Dependencies. There will be general elections in both Jersey and the Isle of Man, and tax reform is sure to be an election issue in both of our sister islands. I know, from conversations with politicians from Jersey and the Isle of Man, that both jurisdictions are watching our review process with keen interest. We are aware that the review is creating some uncertainty, but the process is necessary.

The results of our own general election showed a significant level of disquiet over the direction of travel adopted by the last States. At the very least, we can say that the previous States failed to take the public with them. To minimise the uncertainty, we are doing two things. Firstly, we aim to conclude our review as quickly as possible, consistent with doing the job thoroughly. Secondly, we have limited the scope of the review to eliminate the possibility of changes to certain fundamental facets of our tax system. We will not be proposing: a) substantial changes to our personal income tax system; b) the introduction of capital taxes such as wealth tax, inheritance tax or capital gains tax; or c) changes to the Guernsey exempt companies tax regime (for investment funds or other collective investment schemes).

Income tax increases were debated near the end of the last political term and rejected. While easy to introduce, it’s a flawed idea for many reasons, including that the increase would have to be significant (more than the 2p in the pound rise previously proposed) to raise the amount needed. Other taxes listed above would not raise the sums needed but would have a material impact on Guernsey’s attractiveness compared to our competitors. These are just some of the reasons why these options have been excluded from our review.

Since the sub-committee’s formation, we have been committed to openness. Our terms of reference and a range of supporting information are available at gov.gg/taxreform. We have engaged with States members, and will continue to do so, and have met with industry stakeholders to ensure that the views of business are heard and considered. But we also want to do all we can to keep the community informed and, alongside updates such as this column, as we progress our work we will ensure there is an opportunity for the public to hear from the independent experts on the sub-committee. We know that a significant number of people in Guernsey are opposed to GST-plus, which is understandable (who wants to pay more tax?), and we think it’s important that the public have an opportunity to hear from the tax experts supporting our work and also have their voices heard.

Speaking personally, I have long argued that corporate tax reform could play a significant role in addressing our fiscal challenges. That remains my view, but ultimately this is about equipping the Assembly and the island with the information needed to make a final decision, and an informed choice. We want people to be well informed about this issue, so we invite you to read the information on gov.gg/taxreform and then actively engage with the topic of tax reform, let us know your views, contact States members and be active on this issue. It affects us all.