The Confederation of Guernsey Industry has raised concerns that the proposed GST will have a detrimental effect on local businesses, be costly to administer and fails to address the reality of living on an island with finite resource.
The Confederation of Guernsey Industry (CGi) has re-emphasised its preference for a modest rise in income tax along with other measures.
The industry body has previously surveyed its membership and results indicated that 80% of respondents opposed GST, given the financial impact it would have on small businesses and their owners. When this was first discussed in the States, the CGi commissioned an independent report by the Henley Business School to look at the whole issue of GST and its potential impact on the Bailiwick, positively and negatively. The full report can be found here.
The CGi met with P&R representatives in late 2022 as part of the consultation and put forward its concerns and offered alternative proposals including income tax, a health tax and deferred pensions as ways in which the States can raise revenues.
The CGi’s chairman, Dave Newman said: “We have been unequivocal for many years in opposing a goods and service tax as it would have a negative impact on some key sectors of the economy.
“The burden on businesses in the Bailiwick would be onerous, particularly with the new disability legislation coming into force, the issue of secondary pensions, cost of living crisis, together with the increase in materials, the population management law, staff recruitment issues and finally, the continued impact of Brexit.”
The CGi agrees with the Institute of Directors member survey that any income tax raised should be borne by not only the public but companies and the public sector. The CGi has examined at the figures presented by the States to justify the introduction of GST and does not believe they are credible and do not reflect the full financial picture facing the Bailiwick of Guernsey.
Mr Newman added: “We accept that the States is in a difficult position and no-one wants to see any rise in their personal costs, but income tax and some social insurance reform – especially for higher earners – is seen by our members as by far and away the most efficient and fair system for collecting additional revenues if required.
“A further point raise by our members is the apparent failure of successive States to address expenditure. Civil service reform and curbing public spending has been a topic raised over the previous two terms and it seems little action, if at all, has been forthcoming. When households and businesses are having to ‘cut their cloth’ accordingly, given the present financial climate, the CGi questions whether the States and civil service should be doing the same?
“As a small and open jurisdiction with a substantial proportion of small and micro businesses, such a tax would have a negative and disproportionate effect on growth and innovation in these important sectors. GST would also need to be set up, administered and collected, which in itself would potentially require a whole new States department to run rather than the four extra staff claimed.”
Some of the industry body’s considered options for increasing States’ income include:
- Reduction in government spending
- Reduction in both government and civil servants’ costs
- Modest increase in income tax
- Introduction of a health tax which could be levied through payroll similar to social security
- Introduction a property tax for vacant properties
- Introduction of deferred pensions
- Caps set on both civil servants and government pensions
Finally, the CGi noted that although this statement is as a direct result of consultation with its wide range of members, it would seem, given the public attendance over this last weekend at the GST rally that it is not just the CGi, but also a significant number of the public at large that is opposed to GST.
