Charles Parkinson Unveils Maiden Guernsey Budget

by Phillip Morton, Investors Offshore.com

13 November 2008

Minister Deputy Charles Parkinson presented his maiden budget late last week under the theme of "measured consolidation" in "a time of great challenge for Guernsey".

He said: “This Budget has been prepared on the basis of maintaining the real value of taxes and other income sources, in order to fund the existing level of public services and some essential service expansions.”

He added: “We remain consistent in our approach that in order to raise revenue to pay for services the public wants, it is right to use existing taxes and target the beneficiaries of the Zero-10 reforms.”

Tax changes within the budget include duty rises for tobacco of 8.5% (21p a packet) in line with States’ instructions. Alcohol will be subject to a 5.5% increase amounting to less than 2p on a pint and 7p on a bottle of wine. An additional levy of 2p will be added to every litre of motor fuel sold.

The Minister has proposed to increase property taxes, where domestic householders would see a 5.5% increase in their TRP charges, with 25% proposed for offices and a 50% increase for the financial services industry.

The indirect taxation increases are expected to raise an extra GBP3.5m for the government's coffers.

The Treasury and Resources Department has agreed to increase personal income tax allowances by the rate of inflation for next year in a move to subsidise the public's disposable income. The move will change personal allowances for a single person to GBP8,700, costing the States GBP4m. This reverses the decision taken in the 2008 Budget to freeze personal allowances for 2009. The government has also said that they will increase that by a further 4% in 2010 ultimately costing the exchequer an additional GBP3m.

Deputy Parkinson said:

“My Department is strongly of the view that the value of the personal income tax allowances should be maintained in real terms, at least until our joint review with the Social Security Department, of a possible system of tax credits is completed.”

The Budget indicates that a drawdown of GBP8m will be required from the Contingency Reserve in 2009.

For 2008, States income is up more than GBP20m mainly attributed to one-off receipts of tax from companies in respect of income arising prior to 2008.

The States have also vowed to provide funds to support essential infrastructure development. GBP50m will have been added to the Capital Reserve during 2008 and a further GBP20m is proposed for transfer on January 1, 2009.

Recommended