Guernsey Minister Raises 'Stealth Tax' Concerns

by Jason Gorringe, for LawAndTax-News.com, London

25 March 2005

Following the publication by the Fiscal and Economic Policy Steering Group of a consultation document on the way forward for Guernsey's tax system, Social Security Minister, Mary Lowe has hit out at the suggestion that social insurance contributions should effectively be increased to plug the "black hole" left by planned corporate tax reforms.

In its report, the Steering Group recommended a reduction of the States grant to the Guernsey Insurance Fund, a move which would mean that contributions, especially for the Island's wealthy, would need to be increased.

Deputy Lowe reportedly argued that:

"At present, if you earn at or above the upper earnings limit, you pay the full price of the insurance contribution for the scheme. People who earn lesser amounts pay lower contributions and their shortfall is made good by the States grant. But the high earners are also high taxpayers."

She continued:

"Plans to reduce the grant to the insurance fund will not include any reduction in individuals' personal tax. They will still pay their 20% after allowances. But then you will also turn their social insurance into social tax and ask them to help pay other people’s contributions as well. That’s not fair."

"The right area to raise money is through the tax system rather than double taxing people," she concluded.

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