GST will benefit Guernsey says Jersey tax expert
BBCA Jersey tax consultant said Guernsey would benefit from introducing a 3% goods and services tax (GST) from 2029.
John Shenton, senior tax consultant at Grant Thornton, said people in Guernsey would "hate" the decision now, as Jersey people did ahead of its introduction there in 2008, but "after a while you get used to it".
He said he thought not exempting food from the tax had kept the overall rate lower - and if the exemption had been brought in the tax would now be closer to 10% instead of the 5% it had been since 2011.
His comments follow the States of Guernsey's decision to introduce a 3% GST from 2029.
'Best alternative'
Shenton said Guernsey had "enormous problems" with its tax authority - with a 12-year backlog - which GST could help with.
He said: "Bringing in something which is relatively simple, relatively easy to administer, I think can only be a benefit to the people of Guernsey.
"They will hate it [GST], as did the people in Jersey, but I think after a while you get used to it."
Shenton said the tax had added about £1bn to Jersey's economy. This year, Revenue Jersey estimates the government will collect £132m in GST.
"If you took a billion pounds out of the Jersey economy over the last 18 years, then we would be in a much more sorry state than we are now," Shenton said.
He said Jersey would have had to increase other forms of tax such as social security or income tax.
Shenton described GST "as the best alternative" for Guernsey.
Goods and service exempt under the law include financial services, insurance, postal services, prescription medication, registered childcare and school fees, while buying, selling or renting accommodation and exports are among the goods and services zero-rated for GST.
Before and since its introduction moves have been made to exempt food from the tax.
Former politician Raluca Kovacs proposed to removing it from food in 2022 due to rising prices, but the move was defeated in the States.
She said: "I was hearing from people who were working hard and still struggling to put food on the table."
Kevin Lewis, who was part of the States of Jersey from 2005 until this year's election, voted against GST and voted for the tax to be taken off fruit and vegetables at the time.
He said: "I knew that we needed the money obviously, but I've got a problem with GST on food and I thought this is a slippery slope."
Lewis said he expected the tax to continue rising after it was increased from 3% to 5% in 2011.
Lewis said the main lesson Guernsey's government can learn from Jersey is to "pick a rate and stick to it".
He added: "People will never forgive you if it goes up too high."