Next States likely to revisit plans for GST-plus

The majority of Guernsey's new government would not support proposals for a tax package including a goods and services tax (GST-Plus) should they stick to their manifesto pledges.

Most of the deputies elected last week campaigned on a ticket to oppose GST-plus – which is due to be introduced in 2027, or said they wanted to explore other revenue raising options.

It means the taxation plans, which would raise £50m annually, may be at risk when Guernsey's States Assembly resumes.

It comes as Guernsey States accounts for 2024 are set to be published later on Monday, revealing a deficit in public finances.

The outgoing President of Policies and Resources Committee (P&R) Lyndon Trott previously announced the States spent £44m more than it brought in last year.

In this context, candidates' views on taxation and the economy were of critical importance to many voters deciding where to cast their votes for last week's general election.

Should deputies stick to their promises, the next mandate for government could see GST-Plus – which was agreed in November - scrapped altogether.

The GST-Plus package of tax reforms includes a 5% GST, lower income tax rates for earnings under £30,000 and social security reform, to start in 2027.

Most candidates said in their manifestos they wanted a "fairer tax system" for the island, but lacked detail as to how they would approach tackling the financial deficit.

Half of Guernsey's next assembly - 19 in total - said they were firmly against GST or GST-Plus. Some of them indicated they had opposed the policy in the past and were hopeful it would be reconsidered.

A further eight said they wanted to explore other options before ratifying the last States' decision to introduce the new tax, but would consider GST-Plus as a last resort.

Four prominent GST-supporting politicians were voted out.

Out of the 38 elected candidates, only 11 pledged to back GST-Plus in upcoming votes the new States is expected to hold early on.

Other ways to tackle expenditure included closing corporate tax loopholes, improving tax administration, reforming the zero-10 corporation tax model and slashing public spending.

Former States economist and incoming deputy, Dr Andy Sloan said the new government had a mandate to "turn over every stone" before introducing GST-Plus.

He said he would like to see a three-pronged approach to "introduce a consumption tax, reform corporate tax and restraining expenditure" to balance the public accounts, but stressed that the introduction of a GST should be the last resort.

He said: "The message from the electorate was they wanted no stone left unturned before GST being introduced and they don't believe that's been done yet.

"The States has to follow the will of the electorate and listen to that message and focus on restraining expenditure."

He said when he first came to Guernsey over a decade ago spending was about £296m and it has now "ballooned" to £700m.

"I think the public really want to see expenditure restraint first. The majority of those who topped the poll were elected on that message," he said.

"We can't keep spending at twice the rate that we have income coming in, which we have been doing for 10 years."

Returning Deputy Gavin St Pier, the leader of Forward Guernsey, is among those not supportive of GST-Plus "in its current form".

He said: "We don't oppose a consumption tax but before it hits the streets it does need reform to make it fairer. It's really important to get the community behind this kind of tax change.

"It is so fundamental - it will affect everyone on the island for generations to come."

At the first States meeting where business will be discussed - on 15 July - members will debate the accounts for 2024.

With public finances set to become a major theme next term, all eyes will be on what the States does next.

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