Amendment Proposes Major Tax Overhaul with Emphasis on GST
Deputy Peter Roffey and Deputy Peter Ferbrache propose an amendment to introduce a comprehensive tax package by 2027, including a new lower income tax band and a Goods and Services Tax (GST).
- Deputy Peter Roffey and Deputy Peter Ferbrache propose an amendment to introduce a comprehensive tax package by 2027, including a new lower income tax band and a Goods and Services Tax (GST).
- The proposed tax changes aim to secure a sustainable model for Guernsey's public finances, diversify the tax base, and better distribute the tax burden between individual income and consumption.
- The amendment offers four options, ranging from including P&R’s temporary income tax increases to the full implementation of the tax package without a 2026 tax review.
- This proposition follows repeated failures to agree on fiscal reforms and is presented as an alternative to budget proposals that significantly impact middle-income households.
- Analysis indicates the tax package would lessen the financial impact on lower and middle-income households compared to the current Budget while raising comparable revenue.
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In a sweeping proposal aimed at reshaping Guernsey's tax landscape, Deputies Peter Roffey and Peter Ferbrache have introduced an amendment to the States of Guernsey's annual budget for 2025.
Their plan targets a far-reaching revision of the taxation system by 2027, with a focus on introducing a lower income tax band of 15% for individuals, a Goods and Services Tax (GST) at a rate of 5%, and a restructuring of social security contributions among other measures.
This initiative emerges from the need for a sustainable fiscal strategy that not only addresses the immediate budgetary challenges but also ensures long-term financial stability for the island.
The deputies' amendment is presented as a crucial bid to overhaul a tax system that currently burdens middle-income households and threatens the island's economic competitiveness.
They argue that the existing proposals, including a temporary increase in income tax rates and the perpetuation of social security rate hikes, fall short of addressing the structural deficit plaguing Guernsey’s public finances.
By contrast, the proposed tax package seeks to broaden the tax base from its heavy reliance on personal income taxes to a more balanced approach that includes consumption taxes and reformed social security contributions.
The proposed tax reform package is designed to achieve several objectives. Firstly, it aims to reduce the disproportionate tax burden on individual income by diversifying revenue sources through the introduction of GST.
Secondly, it seeks to mitigate the financial strain on lower and middle-income households, offering them relief through lower tax rates and improved tax allowances.
Lastly, by expanding the tax base to include consumption taxes, the plan is to enhance Guernsey's fiscal autonomy and adaptability in the face of demographic changes and emerging economic challenges.
The analysis accompanying the amendment outlines four possible scenarios that the States Members could vote on, ranging from the rejection of all proposed measures to the full implementation of the tax package without proceeding with the planned 2026 tax review.
Underlying this proposal is a recognition of the pressing need for decisive action to rectify Guernsey's fiscal course. The deputies emphasise that the recommended changes offer a more equitable, competitive, and sustainable fiscal framework compared to the status quo or the temporary measures currently under consideration.
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