Government is carrying out a full tax review with two key workstreams.
The first is the GST-plus package, which includes a Goods and Services Tax alongside changes to income tax and social security, with measures designed to protect those with lower incomes.
The second workstream is corporate tax reform and there are 5 options on the table.
These two workstreams will come together with a policy paper published in May, to be debated in June.
Reforming our tax system has been debated for nearly 20 years, and this uncertainty isn’t good for business – we really need to make some decisions in the coming months.
The first decision, due end of February, is about how GST would apply to food and non-alcoholic drinks if GST goes ahead.
Many people are suggesting that increasing income tax is the simplest way to raise some more revenue – but changes to Income Tax alone is not the answer as our demographics are changing fast.
In 2023, there were around 22 people of working age for every person aged over 85. By 2053, its calculated to drop to just nine people of working age for every person over 85.
Which means:
- More people relying on services funded by tax and social security
- But less people paying these taxes
As a result we do need a broader mix of revenues – but which ones?
Background
In November 2024, the States agreed to carry out the necessary preparatory work to implement significant changes to the way taxes should be collected in Guernsey to deliver a net increase in tax revenue of around £50m.
This is known as the Goods and Services Tax plus personal income protections package. Additionally, following the 2025 General Election the Policy & Resources Committee agreed to launch a Tax Review Sub-committee to look at alternative options to the introduction of the GST plus personal income protections package, such as reviewing corporate tax.
More information is available here Tax reform – States of Guernsey
