Guernsey is unlikely to fill its financial ‘black hole’ before business tax is axed in 2008.

Jersey yesterday announced that it would start compensating for the £100m. deficit caused by abolishing business tax with new measures, including VAT or sales tax, in 2007, two years before it moves to a zero corporate tax rate.

Jersey’s Budget proposals, presented to its States members this week, contain warnings from the Policy and Finance Committee that the introduction of other taxes may need to be brought forward to address the hole left by zero business tax.

Laurie Morgan, president of Guernsey’s Advisory and Finance Committee, said no decisions would be taken until after next year’s general election.

‘It’s unlikely that we would do anything like that; we’ve just started to work on that now,’ he said. ‘We will not be going to the States for changes in taxation ahead of the election.

‘It still gives us plenty of time because we are talking about a period after that of three full years before the changes come into effect, just before the next election.’

Deputy Morgan stressed again that Guernsey was in a more favourable financial situation than Jersey and that there was not the need to generate as much revenue.

‘They have reason to be wanting their public to accept the changes that have to be made and we are not in that position. We prefer to wait a little longer.’

*The Advisory and Finance Committee will publish its Budget proposals on Friday of next week.