More should have been done in this year’s Budget proposals to offset the loss of revenue caused by the 2008 move to zero corporate tax.

The Confederation of Guernsey Industry said it was generally supportive of the Budget, particularly its recommendation that a prudent and disciplined approach be taken to control capital expenditure in the coming years.

‘We would have liked them to give some indication of what’s going to happen to replace corporate tax,’ said CGi director Peter Budwin.

‘Given the unsettled nature of the finance sector in the offshore jurisdictions and the introduction of zero corporate tax in 2008, there are some dark economic clouds looming over the Guernsey economy.’

Mr Budwin said the Budget dealt with the expenditure side of the equation well but he wanted to see initiatives now to fill the financial ‘black hole’.

‘From our perspective it would be easier to deal with a little financial pain now in order to start to build up Guernsey’s reserves, rather than have to experience a larger increase in whatever taxation method is chosen by the States in future.'

‘Things are easier to swallow when times are good - and things are pretty good.'

‘We make this statement with the proviso that the method is focused and does not create uncertainty for the Guernsey industry and business community.'

‘The CGi feels this strategy would be more helpful to our business planning and also that of Guernsey plc.’

He hoped several suggestions about how best to fill the black hole would be put forward before any firm decisions are taken.

‘They will have to come up with a menu of things and air them before implementing them through the business community because I expect it will bear the brunt of this.’

Mr Budwin said the new government, which will come in next April, would face many challenges - none more important than to maintain the financial health of the island.

‘The 2004 Budget gives them a framework to work with in achieving this goal. Let’s hope they are up to the task.’