Above inflation tax hikes on property, fuel, tobacco, first vehicle registration and a new levy on vape liquid have been proposed in the States’ 2026 budget.
Policy & Resources have today published its plans for how public money is raised and spent for the coming year. The budget will be debated by the States in November.
The Committee is predicting that spending and liabilities will exceed income by £48m, after States-owned company losses, depreciation and capital projects.
Revenue is projected to be up 5.6%, but spending is expected to increase by 4.3% on 2025 levels with healthcare and inflation costs going up.
P&R has therefore proposed some tax increases to mitigate this…
- 8.3% increase in domestic property tax
- 5% increase in commercial property tax
- 4.3% increase in fuel duty – 3.7p on a litre of petrol
- 13.3% increase in tobacco duty – £1.14 on a pack
- 3.3% increase in alcohol duty – 1.7p on a pint
- 8.3% increase in first registration duty
- A £2.20 tax on every 10ml of vape liquid from late 2026
P&R has also proposed increasing our personal income tax allowance by £600 to £15,200 to mitigate the effects on households.
£4m worth of new recurring savings are also suggested, with the initial focus on reducing the use of consultants.
P&R also wants to remove the additional 2% rate of document duty on buy-to-let homes to stabilise the rental housing market.
These measures are expected to raise an extra £1.2m in real terms over the coming year.
£12m extra spending is proposed for States departments, with P&R rejecting most budget requests deemed unessential which had totalled £28m.
Most of that cash will benefit Health & Social Care, with extra going to corporate services such as IT investment, Home Affairs and non-contributory benefits.
Deputy Lindsay de Sausmarez, President of P&R, said the budget reflects “the very challenging financial position that we are once again in”.
“We have known for some time that the combination of the switch to Zero-10 and our changing demographics – the reducing proportion of working age people to retirees, and the increasing health and care needs of our population as we are on average living longer – have profound implications for fiscal balance,” she said.
“Our tax base needs to adapt to the new reality, and work is well underway, leaving no stone unturned to enable the States to agree a definitive way forward next year.
“To balance the books, we’re proposing some modest increases in some taxes and duties combined with some savings through reductions in expenditure. Committees have not been given all that they have asked for, but we hope our colleagues appreciate the need for fiscal restraint in the current circumstances.”
More to follow…