A man in a suit outside a government building.

The public has a “right to know” what GST will cost to implement and what the “wider consequences might be”, according to a Guernsey Deputy.

Speaking to Express, Deputy Rob Curgenven said the Tax Policy Letter – which Policy and Resources (P&R) published last week – appeared to contain “significant gaps”.

Deputy Curgenven, a qualified accountant, submitted a series of Rule 14 questions to P&R on Friday, asking questions about how much GST would cost to implement and what the wider economic effects would be.

The Rule 14 questions were submitted independently, before Deputy Curgenven was aware of the existence of a Freedom of Information (FOI) request asking similar questions, which was submitted by Express.

He told Express the public had “a right to know not only what a Goods and Services Tax might raise, but also what it could cost and what its wider consequences might be”.

‘Significant gaps’ in evidence

Deputy Curgenven said the policy letter appeared to contain “significant gaps in the evidence presented, the data relied upon and the assumptions underpinning its conclusions”.

He added: “It is also not clear whether sufficient account has been taken of the additional costs that could arise from the policies themselves.

“For example, if inflation increases, what assessment has been made of the consequential effects on public sector pay, pensions and other areas of government expenditure?”

He said the questions went “to the heart of whether the proposals represent value for the community”.

He called on P&R to publish its analysis, if it existed.

“If it has not [carried out an analysis], then it is reasonable to ask whether the States Assembly is being provided with all the information it needs to make such an important decision.”

He said the public and the States Assembly deserved a “full and transparent explanation before any major reform of Guernsey’s tax system is considered”.

Could GST lose over £1m?

Deputy Curgenven said his own analysis of GST, based on the States’ figures, would lose the island about £1.1m a year overall.

While Deputy Curgenven is a qualified accountant and has shared his spreadsheet with Express, the calculations have not been independently verified.

He said: “I fully admit these calculations could be wrong, I may have misinterpreted, and hope that P&R will redo this table with their workings.”

Deputy Curgenven’s questions in full

Deputy Curgenven asked the following questions on Friday 12 April, and said he was expecting a response within 15 days from then.

Question 1 — Composition and basis of the consumption tax revenue estimate

Paragraph 1.4 states that the consumption tax measures will raise £55m. Figure A7.1 attributes £41m to GST on local households, £5m to GST on visitors, and £11m to ISE scheme fees, with adjustments to income support and the Essential Costs Relief Payment.

  1. Would the President reconcile the £55m figure at paragraph 1.4 with the components at Figure A7.1, identifying each item and amount netted off in arriving at £55m; and, if the figure is a rounded or presentational simplification, state the precise underlying figure?
  2. Would the President state the estimated value, in £, of the taxable consumption base underlying the £41m household estimate, and identify by name and year of collection (as distinct from the year of any subsequent adjustment or uprating):
    1. the household income data; and
    2. the household expenditure data used to model consumption patterns?
  3. What percentage compliance rate is assumed in the £41m estimate, and what allowance, in £ or percentage terms, is made for leakage, including evasion, bad debt and administrative losses? If no such allowance is made, would the President confirm that?
  4. Would the President state the estimated annual visitor expenditure base, in £, and its source, underlying the £5m visitor estimate?

Question 2 — Consequences of the settled GST design

  1. How many businesses are expected to exceed the registration threshold and be required to register, and how many trading businesses are expected to fall below it? On what basis did the estimate apportion taxable supply between registered and unregistered businesses?
  2. Has any assessment been made of the incentive for businesses trading near the threshold to restrain or restructure turnover so as to remain below it, or of the competitive effect between registered and unregistered businesses supplying the same markets? If yes, what were its conclusions? If no, would the President confirm that?

Question 3 — Demand response, business viability and continuity of supply to the islands

Paragraph A8.9 states that the GST “may reduce the marginal propensity to consume, particularly on high value, non-essential goods and services”, with the greatest impact on retail.

  1. Is the £41m household estimate stated gross or net of an assumed reduction in the volume of consumption following introduction of the GST? What percentage reduction in volumes is assumed, in aggregate and for the retail and hospitality sectors respectively?
  2. Has any quantified assessment been made of the number of businesses — in particular smaller retail and hospitality businesses — expected to cease trading as a result of the combined effect of GST compliance obligations, the increase in employer social security contributions and recent increases in employment costs? If yes, what were its conclusions? If no, would the President confirm that, and state the basis on which the £1.1m business support provision and the TRP commitment were sized?
  3. Would the President state the rate of registration among overseas suppliers assumed in arriving at the expectation that around 90% of goods will be processed through supplier registration arrangements, and the evidential basis for that assumption, including any data from Jersey? Also:
    • Is the 90% figure a planning expectation or modelled estimate?
    • How will goods above the de minimis threshold from unregistered suppliers be processed at the border?
    • What is the assumed cost and processing time per consignment?
    • What proportion of off-island retailers are expected to withdraw?

Question 4 — Year-by-year net revenue position

  1. For the year of implementation and each of the following four financial years, would the President state separately:
    • gross GST receipts (including visitors);
    • ISE fee income;
    • ongoing administration, compliance and enforcement costs;
    • cost of benefit increases and the Essential Costs Relief Payment;
    • resulting net revenue;
    and confirm whether figures are in 2026 prices or nominal?
  2. Would the President confirm:
    1. whether public sector pay awards will increase in line with GST-related price rises;
    2. what consideration has been given to potential real-terms pay cuts;
    3. the additional Pension Scheme costs over 50 years from a 1.9% higher price level;
    4. whether pension uprating costs have been deducted in the £55m and £39m figures;
    5. whether GST on States procurement has been deducted?

Question 5 — Public sector pay and pension scheme costs

  1. For each year 2016–2025, state:
    1. the agreed public sector pay award;
    2. RPIX for the same period;
  2. State the annual pay assumption for 2027–2030 and whether inflation assumptions include the GST effect.
  3. By how much would the £415.4m pay bill increase per 1% pay award, and what would be the recurring cost if 2028 reflects GST-linked inflation?
  4. Do projections assume pay negotiations exclude GST-driven inflation? What provision is made if this assumption fails?
  5. For the Pension Scheme, state:
    • additional annual cost of uprating pensions;
    • increase in accrued liabilities;
    • increase in liabilities linked to final salary members;
    and confirm any areas not quantified.
  6. Identify any quantified analysis underpinning paragraph A8.13; if none exists, confirm that.

Question 6 — International Services Entity scheme

  1. State the number of entities (by category) expected to take up certificates in the first three years, and fee levels.
  2. State Jersey benchmarking data used (fees and entity numbers), including year and adjustments for differences.
  3. Is the £10–12m estimate gross or net of GST forgone? State the value or confirm if unestimated.
  4. What is the estimated revenue under a low-participation scenario? If none, confirm that.