Members of the Policy & Resources Committee joined the Institute of Directors (IoD) Guernsey’s June webinar to explain the thinking behind the tax reform policy letter and discuss what the proposals could mean for Guernsey’s fiscal and economic future.
The policy letter, published on 8 June, is due to be debated by the States in July. The webinar was timed to provide the business community with an opportunity to understand the proposals, ask questions, and consider the implications before any decisions are made.
The session, sponsored by Skipton International, was chaired by Glen Tonks, Chair of the IoD Guernsey branch, and hosted Deputies Lindsay de Sausmarez, Charles Parkinson, Yvonne Burford, Steve Falla and Andrew Niles.
Mr Tonks said the IoD’s role was to provide an independent platform for a constructive and evidence-led conversation.
‘The IoD’s interest here is straightforward. We want a fiscal settlement that is sustainable, that supports rather than hinders economic growth, and that gives directors the certainty they need to plan and invest.’
Deputy de Sausmarez provided an overview of the policy letter, setting out the fiscal challenge facing Guernsey and explaining the Committee’s view that change is needed to address the gap between public income and expenditure.
The Committee outlined the main elements of the proposed package, including the introduction of a 3% GST from 2028, a reduction in the standard income tax rate to 15% on income up to £28,000, changes to social security, transport tax reform, modest corporate tax adjustments and a programme of public sector savings.
Members heard that the package is designed to broaden Guernsey’s tax base whilst seeking to protect lower and middle-income households. The Committee said that reducing the proposed GST rate from 5% to 3% was intended to soften the inflationary impact and give the community and businesses more time to adjust.
Deputy Burford explained that the package marked an important step towards diversifying Guernsey’s tax base, while Deputy Niles highlighted the need to reduce the island’s reliance on working people as the primary source of tax revenue.
The Q&A session covered a wide range of issues raised by IoD members, including the size of the funding gap, the reliability of revenue forecasts, the potential impact on businesses, online retail competition, social security changes for the self-employed, the role of Pillar 2,public sector savings and the political risk of amendments during the States debate.
Members also questioned how the proposals fit with Guernsey’s wider economic growth ambitions. Deputy Niles said that a sustainable fiscal position was an important part of creating the conditions for investment, infrastructure delivery, and long-term growth. Deputy de Sausmarez noted economic diversification strategies such as offshore wind but stated that economic growth was something businesses as well as policy-makers should be working towards.
The Committee confirmed that an assurance review is proposed for 2030, which would allow the States to assess the real-world impact of the measures and consider whether further changes are required. This review would also take into account potential future revenues, including offshore wind, Pillar 2 receipts, and the impact of economic growth initiatives.
Mr Tonks said the discussion reflected the importance of scrutiny and engagement from the business community.
‘This is one of the most consequential policy debates of this political term, and it is vital that directors and business leaders have the opportunity to understand the proposals in detail.
‘The webinar allowed members to hear directly from P&R, to test some of the assumptions behind the package, and to raise practical questions about implementation and impact.
‘The IoD will continue to support serious, constructive engagement on these issues. Guernsey needs a sustainable fiscal position, but it also needs a tax framework that supports confidence, investment and long-term economic growth.’
The IoD Guernsey branch would like to thank Skipton International for sponsoring the webinar and the members of the Policy & Resources Committee for taking part.
You can watch the full webinar recording here.
