Deputy Charles Parkinson has announced the formation of a new Tax Review Sub-Committee, as part of a two-pronged approach to tackle Guernsey’s ongoing financial problems.
He will Chair the committee, which will focus on two linked work streams. The first is a detailed review of corporate tax reform, including the potential for a territorial corporate tax system, to find a sustainable revenue package. The second stream will focus on the continued preparatory work for the ‘GST Plus’ package already approved in principal by the previous Assembly.
The intended goal is to present a final tax reform proposal to the current Assembly by the end of the second quarter of next year, with input from international tax experts to ensure the process is credible and impartial.
Deputy Parkinson fielded questions from his colleagues when he presented the latest plan this afternoon, including queries over the composition of the Sub-Committee, its ability to produce results, the proposed timeline, and what other taxes could be under consideration during this time of preparation and review.
Workstream 1: Tax Review Sub-Committee
The new workstream has a broad mandate to find a sustainable solution for Guernsey’s financial challenges.
Its primary focus is on corporate tax reform, including a detailed examination of whether a territorial corporate tax system should be introduced, but it will also review the ‘GST Plus’ package.
The committee’s purpose is to find the “best overall package of sustainable revenue raising measures,” which could be a new solution or a modified version of an existing one. It explicitly excludes changes to personal income tax rates and capital taxes.
Workstream 2: ‘GST Plus’ planning
This is an existing workstream that was set in motion under the previous political cohort. Its purpose is purely preparatory, but the committee has been tasked with continuing to plan for the implementation of the ‘GST Plus’ package, which includes a goods and services tax alongside mitigating reforms to income tax and social security.
Deputy Parkinson insisted that this work will be happening in parallel with the first workstream to ensure the ‘GST Plus’ package is ready to be implemented if the Assembly decides to proceed with it.
This is not a new proposal, but a continuation of planning for a package that was already approved by the last Assembly.
Should all go to plan, the States will be back in the first half of 2026 ready to debate the committee’s findings.
As part of his statement to the States today, Deputy Parkinson claimed the work will help form opinions, but will not bind the States to anything.
“We do not as yet know whether this package will form part of our final proposals. However, given the significant lead in time and the policy decisions which remain outstanding, it is essential to keep planning for its implementation.”
Deputy Parkinson continued: “This will mean that early next year we will be asking the Assembly to consider those outstanding policy decisions – including, for example, whether GST would be added to food or not.
“We will being doing so purely to ensure that we have a full GST plus package ready to go IF the States later decide to proceed with it.”
The composition of the Sub-Committee
Three external names have been announced that form this sub-committee, all boasting a depth of experience in the world of Tax, both Law and Policy.
Deputy Parkinson stated that they will be free to voice their opinions, in an independent manner.
“These experts not only have enormous experience but also are independent in the matter of our tax system, so they will give impartial advice which is important to the credibility of this process.”
The experts include Bill Dodwell, Professor Peter Harris, and Mike Williams, whilst Tony Mancini will be an advisor to the Sub-Commitee.
Mr Dodwell is the former Head of Tax Policy at Deloitte, past President of the Chartered Institute of Taxation, and a former Tax Director at the Office for Tax Simplification.
Professor Harris, a lawyer and a Professor of Tax Law at the University of Cambridge, has also worked as a Technical Assistance Advisor for the The International Monetary Fund since 1998.
Mr Williams is the former Director of Business and International Tax at HM Treasury, where he was responsible for all business taxes, including company tax and value added tax.
Whilst Mr Mancini, a former tax partner at KPMG. He was unsuccessful in an attempt to be elected Jurat earlier in the day – losing out in a two-way vote to Susie Gallienne.
AI Assistance, Alternative Taxes and Autonomy
Following the surprise statement from Policy and Resources, deputies took full advantage of their 15 minutes of question time, probing the proposed timeline, the composition of the committee, and what other money makers may be under consideration.
For the everyday Guernsey resident, you’ll be pleased to hear that both Motor-tax and Property-tax won’t be in the picture, as Deputy Parkison claimed they wouldn’t raise the type of revenue that is needed.
Insisting instead that the focus is on approaches that generate impactful sums, such as GST Plus, and potential Corporate Tax Reforms.
Deputy Parkinson emphasised that the Sub-Committee members overall experience speaks for themselves, “with international reputations to protect”, and added that they’re “not likely to parrot”, and free to voice their own opinions.
There were also concerns voiced over any potential loss of business and what impact that would have on the island.
Dr Andy Sloan questioned whether the Sub-Committee would use previous reports which suggested that Corporate Tax measures could do damage to the islands financial industry. He quizzed Deputy Parkinson, on whether they would be utilising previous works from the States to help consider their position.
Deputy Parkinson replied by confirming the committee would have full access to previous reports, investigations and debate resources to help formulate their opinion, and on the timeline, having set a deadline for the first half of next year, Deputy Parkinson also mentioned they would be making “heavy” use of AI to assist in the process.