Guernsey Deputies Express Doubt At Tax Reform Proposals

by Jason Gorringe, Tax-News.com, London

24 October 2005

A group of four Guernsey politicians has expressed reservations over tax reform proposals for the jurisdiction, fearing that a shortfall in tax revenues will clash with the government's objective to eradicate poverty on the island, according to a BBC report.

In an effort to remain competitive as a low tax international financial services centre, and in common with Jersey and the Isle of Man, Guernsey has taken the decision to abolish corporate tax, which is currently levied at 20%, although regulated financial services businesses would still pay 10% tax.

This has left the government with the problem of finding additional streams of revenue to make up for an estimated £48 million shortfall, and it has put various proposals out to consultation, including raising social insurance contributions, the introduction of a sales tax and duties on alcohol, cigarettes and petrol.

However, according to Deputies Jonathan Le Locq, Mark Dorey, Charles Parkinson, and Jack Honeybill these solutions would impact most on the island's less well-off residents, and according to a BBC report, they have issued a statement calling for additional measures to ensure that low income families are protected.

The Deputies argue that the proposals to make up the budget shortfall contradict the States' anti-poverty strategy, agreed in 2003 after it emerged that 16% of islanders live in relative poverty.

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