What now for GST in the Bailiwick?

The ongoing controversy over Guernsey’s Policy & Resources Committee proposals for Guernsey Sales Tax (GST) are set to play out in a States debate on Wednesday 25th January 2023 following a planned protest set to last an hour before the commencement of the government meeting.

The pressure for increasing States revenue goes back to 2021 when the States were faced with ever-increasing costs without any corresponding ways to match spending with revenue. Over the intervening time, mixed responses have come in thick and fast ranging from suggestions about increasing corporate tax rates to a general increase in income tax.

Just as in the smaller islands in the Bailiwick, Guernsey is being compelled to see how public services could be brought up to the standards expected in the United Kingdom. The problem highlighted by Deputy Carl Meerveld, in an open politics podcast with Deputy Peter Ferbrache – lead of Guernsey’s Policy & Resources Committee, is that there have been limited openly transparent consequences that the States members reveal to the public each time spending is voted through by Guernsey States members.

The basic principles of a government only able to spend what it can afford has become very much into view following the recent downgrading of Guernsey’s S & P credit rating from AA- to A+. The inevitable cost increase in government borrowing will necessarily be passed on to the taxpayer.

Deputy Meerveld’s contention and what he intends to put to Wednesday’s debate is that, should the GST debate carry the day in favour of implementation, then the next election would likely overturn the decision due to public opposition. He has therefore put forward the idea of a general review of what the public expects in respect of the size and style of Guernsey’s government.

In effect, it appears that Wednesday’s debate will effectively prove a lively affair but possibly not one which produces a consenting majority to introduce GST. After WWII, measures such as approving the development of Fort George brought considerable wealth to Guernsey and, as with other relatively small island jurisdictions, there is rarely significant economic development or growth without significant inward investment. Perhaps now this is something needing to be explored even if Deputy Ferbrache suggests GST as the only solution.