Ahead of another debate on reforming Guernsey’s tax systems, one Deputy is trying to get answers about who is paying income tax, how much they’re paying, and on what earnings.
Deputy Gary Collins is concerned that the available data does not give enough information before the current States are asked to make what could be the final decision on introducing GST+, or not.
Questions
He asked Policy and Resources for a breakdown of what made up the £353,000,000 paid in net Income Tax in 2024, with sub totals requested for areas like rental income, bonds/dividend, and Company Interest.
Deputy Collins wanted to use the data to assess the current state of the island’s finances before P&R present an updated tax reform package next week – to include GST at a lower rate of 3% – with the States expected to vote on it just a few weeks later.
He is also working on alternate proposals, which he aims to put before the States in July.
Deputy Collins, said he was pleased to get the 2024 Income tax data split that he had requested – but he now has further questions to ponder before working on counter proposals to P&R’s new plan.
“It’s important to understand what makes up the current income parts, before we start changing parts of it,” he said.
Data
Deputy Collins’ Rule 14 questions were only partially answered, with P&R saying it couldn’t disclose full details on tax liabilities related to different income sources.
Instead, the committee offered to meet with Deputy Collins “to discuss his proposal” and “to better understand what he is trying to achieve”.
Deputy Collins was quite clear on why he wants the data when he shared his thoughts with Express.
“Knowing facts and figures is essential because they form the foundation of any informed decision-making, effective problem-solving, and accurate risk management.
“How can I propose any new system, when I don’t know the parts that work or not. The answers, which are still very wide, for example, renting income is 1-2% so that’s £35 million or £70 million, that a big range not to know the fine detail. If offset against personal allowances, which is quoted at costing the States now £120-£130 million a year, it means the States might not get very much from rental income at all, but rents are very high.
“I will wait for the policy letter which is to be published on Monday to see what they have come up in the last year of work, but over the next few weeks I will present a different looking package to States members.”
P&R’s new plan
The current P&R inherited the extant proposals for GST+ – which include GST at 5% and changes to income tax and social security allowances and contributions – from the last States.
Having taken onboard feedback, and the work of the Tax Review Sub-Committee, P&R has decided to work on a new ‘blended’ set of proposals that are due to be published on Monday.
The States will then debate those new proposals in mid-July.
P&R’s new proposals are being led by recently appointed Treasury Lead, Deputy Charles Parkinson, who has vocally been anti-GST and pro-corporate tax reform.
He told Express that the new proposals will include a goods and services tax.
“Policy & Resources will be proposing a package of tax reform measures this summer, including a basic rate of Income Tax of 15%, GST at 3% accompanied by mitigations to protect those on low incomes, reforms to our Social Security contribution system, motor tax adjustments and a range of corporate tax measures, as recommended by the Tax Review Sub-Committee which I chaired,” he explained.
Deputy Collins has said changing the proposals now don’t go far enough towards fixing the problems with Guernsey’s finances, which he says is down to the problems with the systems we have and will continue to use.
“… it’s not just about any new taxes, it’s can the current system, that is clearly already broken, suddenly now work with any extra demands on it, changing the standard rate of income tax to 15%, having a higher rate of 20%, a new GST feeding into it, plus new social security allowances, but can and will it work?” he asked.
“We already have large backlogs of tax assessments and personally I think the move to independent taxation by person, which means that married couples must now submit individual returns has added lots of pressures on systems and staff, which I feel extremely sorry for,” he added. “They should have the right tools to do the job. This feels like we are running before we can walk, how long will the tax forms backlog take to clear?”
