The Guernsey Retail Group is challenging the Policy and Resources Committee’s assertion that the introduction of a goods and services tax would not harm smaller businesses.
In a recent public statement, Deputy Mark Helyar maintained that companies with a turnover of less than £300,000 per annum would not have to register for goods and services tax (GST) and the threshold would in fact protect such businesses.
Based on the feedback received from many retailers, the Guernsey Retail Group (GRG) argues that the effect of a consumption tax on local traders in addition to an increase in administration costs will likely have a significantly negative effect on the sector and therefore the health of local retail centres.
Korinne Le Page (pictured), Head of Retail Development, said: “Quite simply, GST would be disastrous for the retail sector. It would increase IT and admin costs, add to prices at the tills, does nothing to level the playing field with UK and foreign retailers and the imposition of a 6% tax would naturally reduce the disposable income of consumers and their ability to spend in local shops.”
“Rather than persisting with the proposal to introduce a new tax, the States of Guernsey should first focus on what it needs to do to enhance and boost local businesses to ensure that Guernsey residents have a breadth and variety of retail options appropriate and proportionate for the needs of the Island.”
The GRG has particular reservations with the States’ plan to tax UK and foreign retailers supplying more than £300,000 of goods into the Island. The group believes it would be difficult to monitor and almost impossible to manage, so local shops would be at a 6% disadvantage.
Miss Le Page added: “Local retailers who are in competition with UK and foreign online sellers have been calling for many years for the States to ensure a level playing field. The GRG believes that the unintended consequences of decreasing turnover and increasing costs would be detrimental to many sectors, which will inevitably have a serious negative effect on the Island.
“This proposal also does not recognise the value of our industry, which employs 4,000 people locally and we remain concerned by the lack of general support from government for local retail, along with hospitality and other non-finance service sectors.
“We would also question what the States is doing to address the root issue of an ageing demographic and make the retail and hospitality industries more robust.”
