Ahead of a debate this July on whether GST+ will be introduced, P&R has said it is working on a new set of proposals.
The Policy and Resources Committee says it has “taken onboard feedback” to the current plans and a new “blended package” is being developed.
The current P&R inherited the plans for bringing in GST+ from the last States – but the committee has acknowledged the “understandable concerns” around it.
Now, with feedback from “the public, industry and experts” being considered, along with its recent work to review the different options available, P&R’s President said a new package is being put together – just weeks before the States are asked to decide on the new measures.
Reforming Guernsey’s tax policies is one of the biggest decisions the States will make in a generation – and they’ve already taken nearly two decades to reach this stage, since Zero-10 was adopted in 2008.
Successive States have tweaked plans with no firm decisions being made, but Deputy Lindsay de Sausmarez has said the next set of plans – due to be published on 8 June – will “help to balance the books while also addressing some of the understandable concerns raised around the original GST-plus proposals”.
“Following the substantive update we provided last week on the main elements of our wide-ranging work on tax reform, we thought it would be helpful to give some further clarity on our thinking as we move towards finalising our proposals,” she said.
“Input over the last few months from experts like the sub-committee panel, industry feedback and, perhaps most importantly, people in the community has given us a much deeper understanding of the potential advantages and drawbacks of various different options. We are responding to the legitimate concerns raised with a package that we believe finds the right blend of measures for this moment in time.
“There is currently an understandable assumption that we will simply recommend the implementation of the original GST-plus package. Having looked at a range of different variations and approaches, though, we are developing what we believe is a more balanced blend of measures that draws from each of the different work streams and responds proportionately and pragmatically to the issues helpfully raised by the community.”
P&R’s plans – to be published on 8 June – will blend elements of four different work streams that the committee, a Tax Review Sub-Committee, and other States bodies have all been working on.
Treasury work to prepare for the introduction of GST+ has been ongoing since the last States decided to bring in the new system in 2024, while the current P&R and the tax review sub-committee got to work last summer after the June 2025 election.
P&R says its preferred package of “initial reform” to Guernsey’s tax systems “will blend elements of each of the four work streams it has progressed so far this term”.
Chamber
Guernsey’s Chamber of Commerce is claiming a victory, after P&R said it is modifying its tax reform plans.
The industry representative body had raised concerns about the social security aspects of the GST+ plan.
It had said that employers were not aware of the changes that were being proposed and the impact it would have on them.
“We had been pressing government hard on three key asks: transparency on changes, a more gradual phasing of any increases, and a simplified and fair alignment between the treatment of employed and self-employed individuals,” said Chamber.
Within hours of holding a member briefing on the social security changes yesterday morning, Chamber responded to P&R’s plans to produce a new “blended” set of tax reform proposals.
Calling it “positive news”, the Chamber team said: “We will continue to monitor the detail as the revised proposals are brought forward for States debate, and we will keep you informed at every stage”.
The key outcomes Chamber now expects to see in the revised tax reform proposals are:
- Phasing: Employer Social Security rates will increase more gradually, rising to 7.6% (by 2031) rather than the originally proposed 8% (in 2028) – a meaningful difference when set against the backdrop of multiple simultaneous cost pressures.
- Fairness: The treatment of employed and self-employed individuals will be aligned, with an income tax deduction introduced for employer contribution. This was a clear ask from members and we are pleased to see it addressed.
- Earned income only: Social Security for employees and self-employed individuals will apply only on earned income, reducing the wider impact on workers.
- Balanced package: Adjustments will be made to the Social Security allowance and the 20% income tax threshold to balance the overall package.
Diane de Garis, Chamber Treasurer and lead on this workstream, said: “We have worked constructively and in good faith with government throughout this process, and it is genuinely pleasing to see that the concerns raised by our members have been heard and acted upon.
“Businesses were clear: they accept the need for change, but they needed phasing that was manageable, rates that were fair, certainty around the overall employer burden, and a system that treated employed and self-employed workers consistently. The revisions being discussed go a significant way towards delivering exactly that. This is what effective partnership between business and government looks like.”
Work streams
In an exclusive in-depth report Express looked at the five options Deputy Charles Parkinson’s Tax Review Sub-Committee considered and explains why they were each ruled out.
The bottom line was that none of the proposed alternatives can raise anywhere near enough tax on their own to fill the £77m hole in the States’ finances.
P&R will now use the Tax Review Sub-Committees findings, along with feedback from other tax experts and industry professionals as well as concerns raised by members of the public and official bodies to reform its plans.