P&R to propose a 'blend' of tax reform measures

A package including a goods and services tax (GST), with changes to social security contributions, could be changed if deputies agree in July.

Policy and Resources (P&R) said it was working on a blend of tax reform measures which will "balance the books" and address concerns in the original proposals, but that GST will remain a "core" part of the package.

The previous administration agreed to work up plans to introduce a 5% levy along with lower income tax rates and reform to social security contributions.

The Guernsey Chamber of Commerce, which has been pushing P&R to provide clearer detail on its impact of social security changes to employers, said it "welcomes" the new approach.

P&R has been looking at a number of ways to raise revenue through GST alternatives, like higher corporate tax and reintroducing a yearly road tax.

Earlier this month, the committee ruled out introducing a high rate of tax on businesses, like financial services which generate roughly 46% of the island's revenue.

It has also been looking at a reduction in public services to cut spending.

P&R president, Deputy Lindsay Sausmarez, said she was responding to "legitimate concerns".

"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 workstreams."

Diane de Garis, Chamber of Commerce treasurer, said it was "genuinely pleasing" to see the concerns had been heard.

"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."

Employment and Social Security president, Deputy Tina Bury, said: "When we met with Chamber, we were clear that these were "working proposals" and this is something we feel we should emphasise."

In a separate statement, de Sausmarez said GST would remain a "core component" of any package.

A policy letter detailing P&R's preferred tax reform is due to be released on 8 June.

Follow BBC Guernsey on X and Facebook and Instagram. Send your story ideas to channel.islands@bbc.co.uk.