As the last speaker before the Assembly wrapped up yesterday, I spoke against the proposed 3% Goods and Services Tax (GST) in the States. To make my point, I brought two things to the chamber: a shopping basket and a calculator.
The shopping basket represents the daily reality of islanders. The weekly shop.
The calculator is the government’s own online ‘GST calculator.’ Its published intent was to ‘prove’ to families that they would be better off under the new tax package.
Together, these two objects tell us everything we need to know.
A Flat Tax is Never Fair
GST is a flat tax on spending, that we know. Everyone pays 3% at the checkout, whether they are rich or poor. While that might sound fair on the surface, it is actually fundamentally unjust.
A low-income family spends almost all of its income on essentials: food, heating, clothes, transport, and bills. But a wealthier family spends a much smaller share of their income on essentials, saving or investing the rest. When you tax spending, therefore, you end up taxing almost 100% of a poorer family’s income; but only a fraction of a wealthier family’s.
The rate is the same, but the impact is not.
This isn’t rhetoric: it is an established economic fact. The OECD has studied VAT and GST systems across developed countries, good and bad, and confirmed that they are regressive when measured against disposable income.
Simply put, GST hits lower-income households the hardest and even risks pushing vulnerable families into poverty.
Yet this is the exact tax the Policy and Resources (P&R) Committee is asking Deputies to approve.
Food is on the Table
Earlier this year, the Assembly voted to tax food at the standard GST rate. This means everyday essentials like bread, milk, fruit, and vegetables will all be taxed.
However, data from Jersey shows us the real-world consequences of taxing food: lower-income households spend about 16% of their budget on food, while the highest-income households spend just 8%.
By taxing food, we are taking twice the share of income from poorer households compared to the wealthiest.
Read that again.
By taxing food, we are taking twice the share of income from poorer households compared to the wealthiest.
That is the very definition of an unfair tax system.
The Broken Promise of Compensation
To counter this, P&R claim that lower-income households will be compensated through tax changes, allowances, and relief payments. Or ‘mitigations,’ as they are called in the tax policy letter.
While GST is estimated to raise an overly ambitious £55m, over half of that—£28m to be prescise—goes straight back out the door to fund the mitigations. Once you factor in mitigations and administrative costs, GST nets a meager £8.5m.
In other words, P&R’s argument is: “We know tax is unfair, but we will make it fair afterwards.”
But for this to work, the public has to trust that the compensation will be calculated correctly, distributed properly, and, what you’re not told, maintained forever.
And that is where our second object—the calculator—comes in.
The Calculator Doesn’t Add Up
The government asked islanders to trust its online GST calculator. But when the tool was checked against the government’s own policy letter, the maths did not match.
The exact same household details yielded results that differed by hundreds of pounds per year. Naming just one somewhat embarrassing error, the calculator mistakenly applied an 8.5% social security charge where the official policy stated the rate should be 0%.
When the very tool meant to prove a policy’s fairness ends up exposing its flaws, we have a failure of logic. When deputies see this failure and support the GST anyway, we have a failure of leadership.
Where is the Evidence?
P&R still insists the underlying economic modelling is sound. If that is true, where are the tables showing exactly which income groups gain and which lose? Where is the breakdown for pensioners, single parents, and families with children?
So far, we have received nothing but broad assertions that “most households will be better off,” while the detailed data remains hidden from public view.
This means the case for a permanent, generational shift in Guernsey’s tax system rests on two incredibly shaky pillars:
- A calculator proven to contain serious errors.
- Financial modelling the public is not allowed to see.
The Simplest Solution
Some suggest exempting food to fix this. But exemptions create administrative nightmares and often benefit high-spenders more than the poorest.
Others argue for larger compensation packages. But those payments would need to be manually adjusted for inflation year after year, leaving vulnerable families at the mercy of future Assemblies who might decide to cut them.
There is a much simpler, safer option: Do not introduce the tax in the first place.
If there is no GST on the weekly shop, there is nothing to compensate. No calculator is needed, no future Assembly has to remember to inflation-proof relief payments, and no family has to hope the government’s math is correct. The protection for our community is automatic and permanent.
A Matter of Trust
I am not suggesting officials acted in bad faith, not at all. But when a government asks its citizens to accept a permanent tax, it must be able and willing to show its workings and provide tools that actually work.
If a private company asked investors for money using pitches and calculators that contradicted its own official paperwork, no one would invest a single penny. Yet, P&R are asking the Assembly to gamble the household budgets of all Guernsey families on a system that has already failed a basic public test.
Ultimately, this debate isn’t about software or spreadsheets. It is about whether we believe the weekly shopping basket should be taxed.
To me, the choice is simple. Protect the basket. Protect the people. Stop feeding the insatiable bureaucratic machine.
The surest path for Guernsey’s households is the simplest one: reject GST
Deputy Rob Curgenven
