Latest Revenue Figures Paint Positive Picture For Guernsey

by Philip Morton, Investors Offshore.com

24 April 2008

The Guernsey States will have more money to spend than forecast, even after zero-10 tax changes kick in, following bumper financial results for 2007, the Government announced this week.

Figures presented to the Policy Council on Tuesday reveal that total revenue income was a record GBP365mn, GBP26mn ahead of budget, while the government trimmed spending by GBP6mn, against the GBP301mn allocated.

The end result was a budget surplus of GBP70mn – nearly double what had been anticipated.

ETI paid by employees, which the States is looking to, to make up a shortfall in income under the zero-10 tax strategy, was up more than 7% on budget at more than GBP137mn.

Chief Minister Deputy Mike Torode observed that:

"Last year was exceptionally successful for the States. I would say that this is the best launch pad we could have for zero-10. Now the tax strategy is working extremely well and I am optimistic for our future."

"This ETI figure simply reflects the numbers of people employed and their rates of pay. We see it as evidence of a thriving economy," he added, going on to suggest that:

"These numbers mean that the next States will have a degree of flexibility in spending on capital projects and day-to-day spending because this States has handled our finances very well, on the whole."

Income was up in direct taxes from ETI, companies, banks – which paid GBP40mn – and individuals. Indirect taxes raised 10% more than anticipated, mainly due to a significant increase in document duty receipts on property sales.

Mr Torode added that sensible control of public spending had been as important as economic growth in improving the financial position of the States over the last few years.

The year-end results, which have been externally scrutinised, were presented to the States Fiscal and Economic Steering Group last week.

"The focus of this last States has been quite rightly been on maintaining a strong economy and these results are testament to the success of that policy. The next States will be able to focus on allowing the maximum number of people to benefit from this," Torode concluded.

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