Earlier this week someone asked me on social media whether I trusted our chief minister.
I replied that I trust her about as much as I trust a smooth-talking second-hand car salesperson. That doesn’t mean every car on the forecourt is a wreck, but it does mean I’m not buying it on the strength of the sales pitch. Before I hand over my money, I’ll be underneath it with a torch, tapping the chassis with a screwdriver and looking for the rust. Now I’m 10 stone lighter that’s actually possible, although I’ll probably still need somebody to help me get back up afterwards. Healthy scepticism isn’t cynicism, it’s common sense.
So that’s exactly what I’ve been doing with the tax reform policy letter. Not reading the headlines, but reading the detail, looking for where the money really comes from, where it really goes and, just as importantly, what isn’t being said.
It is one of the most frustrating policy letters I have read in years. Not because of what it says, but because of what it doesn’t say.
If you’re asking the people of Guernsey to accept the biggest change to our tax system in generations, surely the most basic question should be the easiest to answer.
Exactly how much money does GST itself actually raise?
Not the transport taxes.
Not the corporate tax changes.
Not the social security changes.
Not the international services entity scheme.
GST.
You’d think the answer would leap off the page.
It doesn’t.
The figures are scattered across 172 pages and a series of appendices. Some totals include GST. Others include the international services entity scheme. Others mix in transport taxes, corporate tax changes, social security changes and spending reductions. I’ve read it several times, scribbled figures all over notepads and checked my calculations more than once. Eventually it dawned on me why I was struggling.
Most of the headline money doesn’t actually depend on GST at all.
Let’s start dismantling the package.
£20m. comes from spending reductions.
No GST.
£7m. comes from transport taxes.
No GST.
£10-12m. comes from the international services entity scheme. Strip away the GST wrapping and what you’re really looking at is another form of corporate levy. If the States believes companies should contribute more, then let’s have that debate honestly and design a straightforward corporate services levy that applies fairly across the corporate sector, with smaller businesses paying less than larger ones.
No GST.
Around £2m. comes from changes to social security contributions.
No GST.
Around £6m. comes from corporate tax reform.
No GST.
Economic Development has also suggested a visitor levy, estimated to raise around £2m. a year.
Still no GST.
By the time you’ve finished adding those figures together, you’re knocking on the door of £50m. without introducing GST at all.
Which brings me back to the question I started with.
Why GST?
I don’t think the answer is because GST is indispensable.
I think the answer is because once GST exists, it exists. Three per cent is today’s rate, five per cent becomes next term’s solution, seven per cent follows the next funding gap, 10% arrives when another committee decides there is another crisis.
Creating GST is the hard bit, increasing it later is politically much easier.
That is why GST matters.
The policy talks about a £55m. consumption tax package, but that figure includes the £10-12m. international services entity scheme, which isn’t GST in the ordinary sense. Elsewhere it says the revised package raises £30m. of net revenue after concessions and mitigations. Yet it never clearly sets out what GST alone contributes once all the moving parts have been stripped away. I found it difficult to work out. You may find it difficult too. Frankly, I don’t think a policy asking islanders to accept a brand-new tax should require them to solve a financial jigsaw puzzle before they understand what they’re voting on.
Then there are the costs that don’t appear in the States accounts.
Hundreds of Guernsey businesses will have to buy software, train staff, seek professional advice, pay accountants, alter bookkeeping systems, complete regular returns, deal with inspections and spend countless hours acting as unpaid tax collectors for the States, all for a tax which, on my reading of the figures, appears to produce a surprisingly modest return once the dust settles.
Frankly, if I owned a small Guernsey business and someone offered me the choice between paying a modest annual corporate services levy or becoming an unpaid GST collector for the rest of my working life, I’d know which option I’d choose.
The irony is that many of these measures could be debated honestly on their own merits.
Should transport users contribute more?
Perhaps.
Should companies contribute more?
Perhaps.
Should visitors contribute towards the infrastructure they use?
Perhaps.
Those are perfectly respectable debates.
But don’t bundle them together, stick a GST badge on the front and pretend GST is doing all the heavy lifting.
It isn’t.
This all comes back to trust.
Why should we trust this government with another penny? What have they done to earn that trust?
For years we’ve been promised efficiencies, transformation, and better financial discipline.
Yet spending has continued to rise, and now we’re told the answer is another tax.
No, the answer is to stop the spending problem rather than feeding the addiction.
P&R says it can save £20m. Excellent, but prove it.
I don’t mean claiming spending has risen by £20m. instead of £40m., and I don’t mean re-badging slower growth as savings.
I mean a genuine £20m. reduction in real-terms spending in the 2027 budget compared with 2026.
Publish the 2028 accounts, let the figures speak.
Show the people of Guernsey that government can actually spend less before asking them to pay more.
If you’ve earned our trust, we’ll listen.
If you haven’t, don’t dare ask us for another penny.
No GST, no blank cheque, no money without reform.
