The Confederation of Guernsey Industry has come out in support of Deputy Lyndon Trott’s suggestion to scrap the proposed introduction of GST and instead raise income tax.
The call follows Deputy Trott’s (pictured) statement last month that he ‘wouldn’t personally hesitate in raising the basic rate of personal income tax’, citing it as pragmatic and fair way of addressing the future shortfall in States’ finances.
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.
“We agree with Deputy Trott on income tax. Since GST was first mooted, our preference has always been for modest rises in the levels of income tax, an increase in the annual fee for businesses, the review of some capital investments and the introduction of a health supplement to generate the necessary funds.
“We are surprised that the States consistently passes over income tax as a way forward. It is accepted that P&R is in a difficult position and no-one wants to see any rise in their personal costs, but income tax and social insurance reform – especially for higher earners – are by far and away the most efficient and equitable way for collecting additional revenues.”
The CGi argues that income tax could easily be increased or decreased without the burden of setting up a new department to administer GST and requiring all local businesses to alter their systems and register.
Mr Newman added: “The mechanism for collection exists, so changes could easily and quickly be introduced without the huge costs of administration for government and all businesses, that a GST would have required. Any rise in income tax could be introduced for a period of time and then changed or removed, as required.
“We would be happy to work with the States, alongside other organisations to explore these options as outlined.”