Some politicians and tax experts in Guernsey say the recent revelation that the island was in surplus by more than £100 million throws plans for a 5% goods and services tax (GST) into doubt.
For years people in Guernsey have been told that the island has a structural deficit with most recent figures putting that at £78 million.
The island’s top committee Policy and Resources (P&R) have now committed to bringing in tax reforms, this could include a GST, but is also likely to include other tax reforms.
But Charles Parkinson who sits on P&R says that the public finances are actually ‘robust’.
He said: “I think it is an open question about how much tax we need and I tend to push back when people talk about a structural deficit. I don’t think you can talk about the structural deficit when we’re in health surplus.”
“My take on this is yes there are serious issues that do need to be considered, yes we probably do need more resources going forward. But we’re not in crisis.”
Graham Parrott, tax advisor, says there is a lot of confusion over the figures.
He said: “My concern is that I’m not sure how many of our politicians really understand the numbers, and I’ve got some sympathy with all of this, because of the difficulty in understanding the information and how varied it is.”
“We saw a headline just yesterday, saying we have a £100 million surplus, so the response to that is going to be why do we need GST?”
P&R have said they are developing a blended package of tax reforms. They are looking at six areas of consideration.
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Continuing the work to enable the timely implementation of the tax package that the previous States agreed if it is agreed by this Assembly.
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Forming a Tax Review Sub-committee to look at alternatives, focused largely on corporate tax.
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Working with States Committees to look at options to reduce public sector expenditure.
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Working with the Committee for the Environment & Infrastructure to move forward transport tax reform agreed by previous States Assemblies.
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Community feedback, based on the regular updates and engagement the Committee has carried out since starting this work in September 2025.
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Industry feedback, particularly around concerns relating to the impact on businesses as a result of the reforms to social security.
Deputy Lindsay de Sausmarez, President of P&R, said: “We are responding to the legitimate concerns raised with a package that we believe finds the right blend of measures for this moment in time.”
She added: “There is currently an understandable assumption that we will simply recommend the implementation of the original GST-plus package.
“Having looked at a range of different variations and approaches, though, we are developing what we believe is a more balanced blend of measures that draws from each of the different workstreams and responds proportionately and pragmatically to the issues helpfully raised by the community.”
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