Top marks to the Guernsey International Business Association, the Confederation of Guernsey Industry and Guernsey Chamber of Commerce who have just released a report warning of the dangers of the island introducing its own form of VAT. Consumption taxes hit the poorest hardest and will also hit local retailers who will incur new expenses as tax collectors and find their profit margins squeezed. The States need to change their culture, get their own house in order and minimise waste and inefficiency before even thinking about introducing such a tax. The pensions, benefits and tax review is looking at ways to square the circle of an ageing population and increasing deficit and how to provide public services in the future. GST is still very much one of the options on the table and may well be coupled with other measures to prize more cash from our pockets. The report warns GST would create a ‘lethal legacy for growth’ and growing our economy is essential to everyone’s prosperity. It would be far too easy to introduce a rate and gradually increase it to meet budget overspends. The tax would also be added to the equivalent of UK VAT in many cases. Many shops refuse to deduct UK VAT from their prices and trouser the money, attempting to justify the move by citing high freight costs, rates, rents etc. Yes, these add a certain amount to the cost of doing business but certainly not 20%. If this were the true cost, how has it exactly tracked VAT from 17.5% down to 15% then up to 20%? To make matters worse, I recently discovered that a UK jeweller based here was charging UK VAT here but not in Jersey. The reality is if GST were introduced at our neighbour’s rate of 5% we would in many cases be paying 25% and I was told when I came here in 2005 this was a low tax island!


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