After a drawn-out saga which included heated States debates and mass protests, it was agreed that Guernsey would follow in the footsteps of Jersey with 5% GST in 2027… but the island’s Chief Minister is now warning it might not be enough to plug holes in the public purse.
In 2023, the island’s States Members twice rejected plans to introduce GST.
However, in November last year, it was agreed that the committee in charge of the island’s finances would work on tax reforms including 5% GST, after States Members threw out a plan to put income tax up by 2p in the pound.
Pressed over a £850m shortfall for capital projects next term by his predecessor, ousted former Chief Minister Peter Ferbrache, Deputy Lyndon Trott said this week: “Unlike some members of the States, I have suggested alternative measures of revenue raises in the past.
“I think the problem we have with GST, and I’m not sure whether the States Treasurer would be pleased to hear me say it, is I don’t think 5% enough.
“I think 5% balances the books, assuming of course, it’s on everything, in the short term. I think that to grow our reserves in the way in which this assembly has decreed, our goods and services tax needs to be higher than that.”
Jersey introduced GST back in 2008 under the then-Chief Minister Frank Walker.
He led the States through debates on introducing a goods and services tax of 3%. That GST now stands at 5% and is levied on all items including food.
With Guernsey now looking at introducing a GST of 5% – along with changes to its tax and social security contribution rates – Mr Walker previously told Express that he thinks Jersey was right to do it years ago.
“What caused it was a decision the Isle of Man government took when they introduced Zero 10 and both Jersey and Guernsey felt at the time, correctly, that we had to react or else we’d have seen a significant outflow of investment in our finance industries to the Isle of Man,” he recalled.
“I can’t speak for Guernsey but as far as Jersey was concerned, it created a very significant hole in our finances which we decided needed to be plugged.”
Much like in Guernsey, the proposed introduction of GST was resisted with a petition signed by 17,000 people which Mr Walker said was unprecedented.
“Nobody liked it, nobody wanted it, but we had to do something significant and we decided that GST was the least worst so ultimately it was introduced in 2008.”
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