Guernsey To Hike Indirect Taxes

by Jason Gorringe, Tax-News.com, London

25 November 2009

Charles Parkinson, Guernsey’s Treasury Minister, has disclosed details of the island’s draft 'conservative' budget, which will increase indirect taxes on motorists, property owners, smokers and spirits drinkers in 2010 to generate GBP3m annually.

Parkinson explained that although the Treasury and Resources Department has observed areas where States' spending could be cut, due to the ongoing structural deficit, it is necessary at this time to introduce more revenue-raising measures.

The department is recommending increases in all categories of indirect taxation except for wines, beer and cider.

The following proposals are contained in the 2010 Budget:

  • 15% on tobacco – 40p on the average packet of 20 cigarettes, raising GBP500,000;
  • 15% on spirits – equivalent to GBP1.26 on a 25-50% ABV litre bottle, raising GBP250,000;
  • 15% on motor spirit – 4.8p a litre, taking duty to 37p a litre, raising GBP1.7m;
  • 10% on all TRP (Tax on Real Property) tariffs – less than GB10 a year for a typical home, raising GBP1.2m.

The Treasury Department has further announced that it intends to investigate the introduction of a higher duty rate for strong beers and ciders, and review the bandings for duty on spirits.

A review of the tariff structure for TRP is also planned, with a simpler structure for commercial categories to be considered.

The Department has not made a recommendation for personal income tax allowances for 2011. It has delayed any decision until late next year to allow the States’ financial position, and the inflation rate, to be taken into account.

In a statement, Parkinson commented:

“Given the planned revision of our corporate tax system and the current economic climate, these Budget proposals are deliberately conservative. It’s just not possible for us to do much more when we cannot model the likely short-term effect on States income either when a new regime is introduced or in the run up to it.”

He added: “I remain concerned about our annual structural deficit and look forward to our work on reviewing the States Fiscal Strategy with the intention of restoring States Finances to a position of long-term fiscal balance.”

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