Business groups urge States to make tax decision

Guernsey's three largest business organisations have urged deputies to make a decision on tax reform, warning the island "cannot afford another term of drift."

The Institute of Directors (IoD), the Guernsey International Business Association (GIBA) and the Guernsey Chamber of Commerce said the debate over public service funding had continued for too long and it was "time for the States to act".

The statement comes ahead of 15 July debate on proposals including a 3% Goods and Services Tax (GST), income tax changes and public sector savings.

The organisations said members had raised questions about the proposals but a decision could "no longer be deferred and continued indecision served no one".

Citing recent IoD workshops and a survey of more than 250 directors, business and community leaders, the organisations said more than nine in 10 respondents believed Guernsey was "at an inflexion point requiring decisive action".

They said only about a third of respondents were confident in the island's ability to support sustainable economic growth over the next five years, while a majority were concerned.

The statement said the "single most-cited constraint" on growth was "government decision-making speed and ambition", followed by a lack of a clear long-term economic direction.

The organisations said parts of the proposals were "moving in the right direction", including plans to broaden the tax base, lower the proposed GST rate from 5% to 3% and provide protections for lower and middle-income households.

However, they said there were concerns about whether the package would "close the structural deficit".

They questioned how much of the plan relied on future revenue streams that were "not yet certain in timing or scale", such as offshore wind income and money expected from a global minimum tax on the world's largest multinational firms.

The groups also warned "the credibility of the whole settlement depends on public sector savings being delivered and demonstrably tracked".

While backing action, they argued tax reform alone would not be enough and said "taxation can stabilise the public finances, only growth can ultimately sustain them".

The joint statement said: "Fiscal settlement that balances the books while doing nothing to strengthen connectivity, housing and the island's competitiveness would solve the smaller problem while leaving the larger one untouched."

They added any deputy seeking to reject the package should explain "how the same revenue or savings would otherwise be found".

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