CGi challenges proposed introduction of GST

The CGi is questioning the States’ proposal to introduce a Goods and Service Tax (GST) which it has outlined as one of the options under consideration for raising revenues.

The Federation believes that a temporary increase in income tax over a limited term would present a more cost effective and palatable option for Islanders and particularly for businesses who would have to incur the set up and administrative costs to implement GST.

David Newman, CGi Chairman, said: ‘The CGi acknowledges the impact of the pandemic on funding and reserves and the States of Guernsey needs to navigate its way forward with caution. We believe that the existing income tax system offers a simpler way to increase revenue and fund the costs of Covid. This could be quickly, efficiently and cost effectively implemented over two or three years.

‘We have always maintained that GST is not the answer. When it was previously raised as an option by the States the CGi spent a lot of time and money investigating the feasibility of its introduction. As it is a completely new tax it requires investment on the part of businesses and the States to both set up and administer. It is also regressive. This means it will impact those on the lowest incomes disproportionately and most likely serve to encourage consumers to shop online even more so than they have already been doing.’

The CGi’s has polled its diverse membership of both large and small local business owners for their input and we will present the findings in due course.

Mr Newman added that in a recent poll, CGi members felt that tax rises can only be considered alongside a reduction in States expenditure.

‘Any changes that are made to address the monetary deficit should be fair and equitable. There should be a desire to remove unnecessary costs not simply increase taxes which will only place more strain on what we all know is a reducing working population.

‘Longer term, we firmly believe ways should be considered for increasing the local workforce whilst controlling the acceptable increase in population. Some of our members are unable to expand their businesses as there is either insufficient labour on-Island to recruit or it is onerous and expensive to bring staff in from overseas.’

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