The Institute of Directors (IoD) has issued the following statement in response to the Tax Review Green Paper which will be debated by the States on Wednesday 29th September 2021.
Paul Beale, lead of IoD Guernsey’s Tax and Regulatory sub-committee, said: ‘The IoD recognise that, given the well documented shortfall of the Guernsey Investment Funds, it is necessary to consider the appropriate methods by which to counterbalance these projections.
Whilst the IoD recognises the challenges faced, we would urge Deputies to ensure full consideration of actions that could stimulate economic growth and opportunities for increased efficiency via public service reform are given appropriate consideration as part of this process.
Furthermore, given the uncertainties that exist in the international tax landscape at present, the IoD believe it to be crucial that any domestic tax reforms are considered in the full context of international tax developments, specifically the OECD and EU ongoing actions in respect of the potential implementation of global minimum corporate tax rates.
Significant investment in digital infrastructure, the increased attractiveness of Guernsey as a stable jurisdiction in the wake of COVID-19 as well as promotion of Guernsey’s financial services sector could all help to further stimulate the island’s economy and help to increase tax take. Furthermore, the IoD notes recent professional studies that have highlighted a significant opportunity for Guernsey to tap into skilled and under-utilised resources within our existing population by encouraging greater diversity and flexibility in our working population.
As noted, COVID-19 offers a unique opportunity for Guernsey to grow its population by attracting individuals in higher income brackets. We must balance any reform and the need to counter our ageing demographic with the need to maximise this opportunity and remain an attractive location to live, work and in which to do business.
Evidence-based decision making is fundamental in all good processes and tax reform certainly requires that. We recognise the choices and responsibilities that sit with policy makers at this time are extremely challenging and that the need to move decisively - but appropriately - is a significant one. The IOD also acknowledges that the challenge may be too vast to be overcome by economic stimulation and a focus on efficiency of public spend - and that some form of tax raise is likely necessary. In that scenario, the IoD believes that the two primary proposals of either GST or an income tax increase warrant consideration and will seek input from its members across Guernsey’s industries to consider the perceived impact of either route.
We would stress again that prior to taking action that could fundamentally alter Guernsey’s attractiveness as a place in which to live, work and do business, we would encourage all involved to ensure that opportunities to raise revenue via growth and save money via efficiency are assessed to the greatest extent feasible before setting the wheels in motion with measures that permanently alter our fiscal landscape.'