Sweeping tax changes including 3% GST approved
BBCSweeping changes to Guernsey's tax system have been narrowly approved by deputies, paving the way for the introduction of a 3% goods and services tax (GST) in 2029.
Politicians voted by 22 votes for and 17 against to approve Policy and Resources' (P&R) tax package consisting of GST, a 15% income tax on the first £28,000 earned, higher social security rates, a new annual vehicle tax, higher corporate taxes and government savings.
Changes to the package, which will see small local producers exempted from GST, were also approved.
P&R said it would introduce the tax package in 2029, rather than 2028, after new estimates for corporate tax receipts came in at millions of pounds more than estimated.
Despite numerous attempts to change it, P&R's package remains relatively unscathed.
According to officials, the package would raise about £36m each year and mean lower earners have more money to spend.
Most of the heavy lifting when it comes to raising revenue is done by the 3% GST.
It is estimated to generate about £46m but the money going into government coffers is chipped away by some of the other changes to taxes.
What are Guernsey tax changes?
Tax free income tax allowances will be increased to £15,800, while a new band of income tax would see working islanders taxed at 15% on income up to £28,000 and the 20% on all other income.
Most islanders would pay higher social security contributions, although a new £11,122 allowance would mean lower earners are protected from some of the increase.
Alongside that fuel duty would be dropped by 25%, with an annual motor tax averaging £132 per vehicle reintroduced, as well as a new luxury vehicle surcharge from £2,500 on vehicles valued above £50,000.
P&R member Andrew Niles said the States had been living off its reserves for years and the changes would allow the States to "invest, build and repair, consider our future and what's over the horizon".
"There's never a good time to tax reform, for every year we wait, the reserves get thinner," he said.
During the debate protesters had gathered on the steps of Guernsey's Royal Court, leading to angry exchanges between protesters and politicians.
Among the criticisms was a move by deputies to curtail debate on potential changes to P&R's plans by using guillotine motions.
Development and Planning Authority President Neil Inder, who admitted he raised a middle finger to protesters, said he did not vote to curtail some debates as "people start crying on the internet if I do that".
Range of proposals defeated
A successful amendment by Forward Guernsey to ratchet up the rate of GST to 5% was eventually not approved at the final vote.
If approved, the plan would have led to higher tax breaks for lower earners and an investigation into how the money from a higher GST rate could be used to provide incentives for young people to stay in the island.
Across six days of debate several proposals to change P&R's tax package were rejected by deputies.
Moves to have a referendum on parts of the tax package were defeated twice, after being put forward by deputies Liam McKenna and Simon Vermeulen, while attempts to increase the rate of income tax to 22% rather than introduce a GST were also voted down.
Deputy David Goy's proposals to investigate taxes on unused properties, high-net worth individuals and big property transactions were overwhelmingly defeated.
Some of his other proposals to restrict the use of consultants by the States were not debated by deputies after successful guillotine motions.
A proposal from Employment and Social Security President Tina Bury and deputy Jayne Ozanne to investigate a wealth tax were overwhelmingly defeated.
"It is clear there is little appetite to tax the enormous wealth on the island," deputy Bury said.
Who voted for and against?
Deputies who backed P&R's proposals were Yvonne Burford, Lindsay de Sausmarez, David Dorrity, Steve Falla, Adrian Gabriel, John Gollop, Sarah Hansmann Rouxel, Mark Helyar, Rhona Humphreys, Sasha Kazantseva-Miller, Marc Laine, Ross Le Brun, Munazza Malik, Paul Montague, Andrew Niles, George Oswald, Charles Parkinson, Sally Rochester, Tom Rylatt, Gavin St Pier, Jennifer Strachan and Steve Williams.
Those who voted against were deputies Chris Blin, Andy Cameron, Haley Camp, Garry Collins, Rob Curgenven, John Gollop, David Goy, Bruno Kay-Mouat, Marc Leadbeater, Aidan Matthews, Liam McKenna, Jayne Ozanne, Andy Sloan, Lee van Katwyk, Simon Vermeulen alongside Alderney Representatives Alexander Snowdon and Edward Hill.
Deputy Inder abstained.
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