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What are the five options for tax reform in Guernsey?

BBC Inside the States buildingBBC
Deputies will decide between five options for how public services will be funded in the future

Deputies are deciding how public services in Guernsey will be funded in the future.

Currently there are five options on the table for politicians:

Option A

  • The Policy and Resources (P&R) Committee's original plans for a 5% goods and services tax (GST) which would raise about £68m and cost £2.4m to introduce
  • This would come with mitigations aimed at making sure people on lower incomes are less harshly impacted by a GST
  • Those include a new 15% rate of income tax on earnings up to £30,000, £600 higher income tax allowances, a reform of social security contributions and pre-emptive increases to pensions and benefits to anticipate the impact of inflation
  • Deputies voted 22-4 to approve the proposal from Deputy John Gollop to exempt food from any future GST

Option B

  • This has been put forward as P&R feared ending the debate with no decision
  • It includes a 50% increase in domestic property tax (TRP), transport taxes like paid parking and distance charging for mileage and higher social security contribution rates
  • Alongside this is £10m-£16m of budget cuts

Option C

  • This has been described by some senior politicians as the "slash and burn" approach, which would see budgets cut by £31m
  • P&R has said this would be difficult in the current system of government, where no committee can be "ordered" to cut its budget

Option D

  • Deputies Heidi Soulsby and Gavin St Pier put forward this proposal after their original "alternative" scheme was defeated
  • It works in two stages, with the first stage in the current States term including £4m of budget cuts, increasing personal income tax allowances by £400, higher property taxes for larger homes and new taxes on business parking
  • The second stage in the June 2025 States term includes a review of States capital projects, a review of corporate tax and a tourist tax

Option E

  • Deputy Peter Roffey's Option E has been put forward as a "broom wagon," as he's also concerned about the States leaving with no decision made
  • His plan is also a two-stage approach, with £55m raised this term through £10m of new taxes on motoring, £6m of higher domestic property taxes, £19m of social security reforms and £20m from corporate tax reform
  • The second phase would be in the June 2025 term and would require the next assembly to find a way of raising £30m

It is looking like a straight shoot-out between Options D and E.

P&R's alternative plans have garnered little support and Option A, including a GST, faces a mountain to climb.

The question is now whether politicians are willing to put aside tribal rivalries and back plans put forward by political rivals as everyone is in agreement that the worst outcome is Option F - coming away with nothing at the end of two years of debate and deliberation.

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