Guernsey Residents Would Pay More Tax To Help Poor

by Amanda Banks, Tax-News.com, London

03 April 2002

A recent survey of living standards in Guernsey has revealed that two-thirds of those polled would be willing to pay more tax in order to help the Island's lower income earners. An extra penny in the pound on income tax would raise £5.5 million per year, according to estimates, which would provide each of Guernsey's 3,000 defined poor households with around £34 extra per week.

Deputy Jean Pritchard, who requested the survey, has commended the results, but warned that such a scheme would not work in practice:

'People said they would pay a penny in the pound for low earners, but we are in a competitive environment and if we raise the rate we will no longer be competitive so we will lose the income tax take,' she explained, adding: 'If people left the island to go to other jurisdictions it would lower the overall tax take, not raise it. It's just not feasible.'

However, there is no dispute regarding the fact that something must be done to assist the jurisdiction's less wealthy residents. Alternative proposals have included the reintroduction of marginal tax relief, which would give those on low incomes an additional personal allowance tapered according to their earnings, or the introduction of tax credits for low income earners.

The President of the Income Tax Authority, Bill Robilliard, speaking to the Guernsey Press and Star this week, announced his support for the latter measure, although he revealed that discussions within the Authority on the issue are at a very early stage.

'It is something we might benefit from,' he observed. 'There are several ways it could operate, but [it] would mean that staff at the Income Tax Authority would identify people on low wages and top their incomes up.'

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