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Guernsey Leak Reveals Sales Tax Under Consideration

by Jason Gorringe, Lowtax.net, London
06 March, 2014

The Guernsey Government has sought to clarify the outcome of a meeting of the Policy Council on February 24, 2014, where possible sources of new revenue for the island were discussed.

The Government said it has been forced to clear up confusion after details of the discussions at the meeting were communicated to the media in a very selective way. The meetings concerned an ongoing review of personal tax and benefits, and consideration of a general sales tax.

The Government stated: "Last Monday a 'work-in-progress' paper was given to members of Policy Council which provided an update on progress in relation to the review, and set out current thinking on a number of options, only one of which was the potential extension of consumption taxes."

"The Treasury & Resources Minister and the Social Security Minister have both been straight with Deputies and the public – when it comes to the personal tax and benefit review, nothing is off the table at the moment, and also no decisions have yet been taken, which would be for the States (Guernsey's parliament) as a whole. This means that the review is at this stage, quite rightly, assessing a number of different potential measures, and how they might interplay."

"Let me reiterate. No decision has yet been taken in relation to the review. No decision will be taken without the proposals being set out clearly and in detail to the States later this year."

"It is very disappointing that a paper shared in confidence with Policy Council at this stage has been selectively leaked in this way. Not least as last week the Policy Council agreed that the information contained in the paper should be held in confidence while proposals remain fluid. Selective release in the way that this has occurred does not help good governance and good decision-making. In fact, it is counter-productive."

The paper has now been published on the Government's website to dispel rumors. The paper notes the over dependence of the current tax base on direct taxes on income, and proposes that the tax base be diversified to reduce the reliance on direct personal tax. On consumption tax, the paper recommends that "Treasury and Resources should be directed to undertake further work and report back to the States, no later than June 2017, on the implications of introducing a broad based consumption tax no earlier than 2019."

Guernsey does not currently levy a sales tax or VAT, unlike the other Crown Dependencies, Jersey and the Isle of Man.

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