{"id":34,"date":"2026-05-13T07:19:00","date_gmt":"2026-05-13T07:19:00","guid":{"rendered":"https:\/\/jonbond.biz\/?p=34"},"modified":"2026-05-18T16:03:40","modified_gmt":"2026-05-18T16:03:40","slug":"gst-is-coming-to-guernsey-can-we-learn-from-others","status":"publish","type":"post","link":"https:\/\/jonbond.biz\/index.php\/2026\/05\/13\/gst-is-coming-to-guernsey-can-we-learn-from-others\/","title":{"rendered":"If GST is Coming to Guernsey – Can we Learn from Others?"},"content":{"rendered":"\n

Given the heat this debate is currently getting (Press report on Chamber response to Social Security Reform as part of GST<\/a>, Bailiwick Express on Suggested Income Tax rise backed by CGi<\/a>), I thought I’d reflect on the topic. This is not a post about whether GST is good or bad, it\u2019s a post about whether Guernsey is going to be honest with itself about what\u2019s coming, why it\u2019s coming, and what we need to get right.<\/p>\n\n\n\n

If we\u2019re not careful, we\u2019re going to repeat mistakes that our neighbours made seventeen years ago.<\/p>\n\n\n\n

The Fiscal Reality We Keep Avoiding<\/h2>\n\n\n\n

Guernsey has a structural deficit that, depending on how you measure it, is now approaching \u00a3100 million a year (according to the policy letter in November 2025). Let that land for a moment.<\/p>\n\n\n\n

This isn\u2019t a temporary dip. It\u2019s not a post-pandemic blip. It\u2019s a gap between what we spend on public services and welfare, and what we raise in tax, that has been building for years while successive States committees warned about it, published reports on it, and then kicked the can down the road. Despite the evident squeeze, the States have been spending more on the day to day and continue to vote through capital projects at great cost.<\/p>\n\n\n\n

In 2024, 54% of total government revenues (including underlying entities revenue1<\/a><\/sup> – 79% of headline revenue) were through personal income tax and social security (2024 States of Guernsey Accounts<\/a>). That\u2019s an extraordinarily narrow base for an island of our complexity. It means our finances are fragile. In practice it also means wealthy people with low declared income contribute less than those earning income from working. It means we can\u2019t fund the hospital, schools, and infrastructure that people rightly expect without either raising income tax, which has its own consequences, or broadening how we collect revenue.<\/p>\n\n\n\n

Let alone the impending democratic time bomb that the island will need to deal with. <\/p>\n\n\n\n

A goods and services tax, at its core, is about broadening the base. That\u2019s not a political slogan. It\u2019s an economic reality.<\/p>\n\n\n\n

What Jersey Did – and What Actually Happened<\/h2>\n\n\n\n

Jersey introduced GST in 2008 at 3%, having concluded there was a \u00a340-45 million revenue shortfall that couldn\u2019t be closed any other way. Sound familiar?<\/p>\n\n\n\n

To be fair to Jersey, they tried to cushion it. They raised income tax allowances, increased Income Support payments, and introduced a Community Costs Bonus for lower-income households. They did the socially conscious version of the introduction, at least on paper.<\/p>\n\n\n\n

But here\u2019s what followed.<\/p>\n\n\n\n

Within three years, despite an election campaign where the then Treasury minister gave what he described as a \u201ccategoric assurance\u201d that he would not bring proposals to raise GST, the rate went up to 5% in 2011 because the structural deficit hadn\u2019t gone away. Jersey then endured over a decade of economic stagnation. By 2015, an austerity package cut \u00a310 million from support for the most financially vulnerable in the island \u2014 the very people GST had hit hardest in the first place.<\/p>\n\n\n\n

A Jerseyman writing in the Guernsey Press put it plainly a few years ago2<\/a><\/sup>: if he had to sum up Jersey\u2019s experience with GST in one word, it would be failure<\/em>. Not because consumption taxes don\u2019t work \u2014 they work all over the world \u2014 but because Jersey used GST to paper over a structural problem without addressing spending, and without being honest with the public about what was coming next.<\/p>\n\n\n\n

The lesson isn\u2019t \u201cdon\u2019t do GST.\u201d The lesson is: don\u2019t introduce a tax, promise it will fix everything, promise the rate will never change, and then be surprised when it doesn\u2019t fix everything and you need to raise the rate.<\/p>\n\n\n\n

What\u2019s on the Table for Guernsey<\/h2>\n\n\n\n

The proposal currently in front of the States is known as GST-plus – and it\u2019s more complex than just a new tax on your shopping.<\/p>\n\n\n\n

The full package includes:<\/p>\n\n\n\n

A 5% GST <\/strong>on most goods and services – modelled closely on Jersey\u2019s system. If food is zero-rated, the rate would need to be 6% to raise the same revenue.<\/p>\n\n\n\n

Social security reforms<\/strong> – most people on low and middle incomes would pay less in contributions, because everyone gets a new allowance before contributions kick in. The rate on income above that allowance rises to compensate. However, the burden falls on local businesses (more on that to come another day).<\/p>\n\n\n\n

A new 15% income tax band<\/strong> on roughly the first \u00a332,400 of earnings – intended to reduce the tax burden on lower earners as part of the overall redistribution within the package.<\/p>\n\n\n\n

Benefit and pension uprating<\/strong> \u2014 the States has committed to increasing pensions and benefits ahead of GST being applied, so recipients don\u2019t face a 12-month wait to be compensated for higher prices. The estimated inflationary impact of GST on the island\u2019s price level is around 3.2%. The RPI inflation rate currently sits at 3.4% for the UK3<\/a><\/sup> – with the Iran conflict it is likely to be even higher, with an additional cost of GST to factor in for 2028 (expected introduction).<\/p>\n\n\n\n

In addition, the social security package which shifts the burden to businesses to the tune of GBP 17 million, may well be inflationary in itself.<\/p>\n\n\n\n

The net additional revenue target is \u00a350 million a year. That\u2019s roughly half of the structural deficit at current estimates, and the deficit is growing. For 2026, the budgeted deficit (before factoring in any investment returns is GBP 78 million)4<\/a><\/sup>.<\/p>\n\n\n\n

The earliest GST could be introduced is early 2028, given the systems, legislation, and business preparation required.<\/p>\n\n\n\n

In should be noted that much of the challenge about the above numbers is that the revenue service is so far behind, with inaccurate data, poor systems and an inability to even make repayments. The data behind these proposals has to be questionable, when the primary source of income is collected by a department which continues to be failing.<\/p>\n\n\n\n

The Arguments For and Against<\/h2>\n\n\n\n

I work with businesses and individuals across this island every day, so I\u2019ve heard both sides at length.<\/p>\n\n\n\n

The case for GST is genuinely strong. Guernsey is almost unique among comparable jurisdictions in not having a consumption tax. Jersey has one. The Isle of Man has one. The UK, Ireland, New Zealand, Australia – every developed economy you can name has one. The argument that it would make Guernsey uncompetitive simply doesn\u2019t stack up when our main competitors all have it too.<\/p>\n\n\n\n

A consumption tax also captures what income tax can\u2019t: the spending of people who are asset-wealthy but income-light. Anyone who has done tax planning work knows that high-net-worth individuals can legitimately structure their affairs to show very modest taxable income. GST doesn\u2019t care about that. You spend money on this island, you contribute to its costs.<\/p>\n\n\n\n

The case against is also real.<\/strong> GST is regressive by nature. A family spending a higher proportion of their income on essentials will feel a 5% levy more sharply than someone with money to spare. The proposed compensating measures help, but only if they\u2019re well-designed and properly maintained over time. Jersey\u2019s experience shows they can drift.<\/p>\n\n\n\n

The food question matters enormously. Whether food is zero-rated isn\u2019t a technical footnote – it\u2019s the difference between a tax that hits lower-income households significantly harder and one that is at least somewhat fairer in practice. That decision is still to be made.<\/p>\n\n\n\n

And then there\u2019s the question of trust. Asking islanders to accept a new tax requires confidence that it will be managed responsibly, that the rate won\u2019t creep, and that it genuinely forms part of a coherent long-term fiscal plan rather than a short-term fix. Given that the structural deficit is approaching \u00a3100 million and the proposed GST-plus package raises \u00a350 million, that question needs to be answered honestly.<\/p>\n\n\n\n

What I Think We Need to Get Right<\/h2>\n\n\n\n

As someone who spends my professional life helping Guernsey businesses and individuals navigate financial decisions, here\u2019s what I think matters:<\/p>\n\n\n\n

Design it properly.<\/strong> The exemption question – especially food – is not something to decide based on political convenience. Get it right from the start, because unpicking it later is much harder. Jersey was told it was too complicated to exempt food. Somehow it wasn\u2019t too complicated to exempt yacht fuel. Complexity in law shouldn\u2019t mean we fail to do the right thing. We\u2019ve experienced a number of years of food inflation, with further inflation to come this year, there is a real argument for essentials to be protected from GST.<\/p>\n\n\n\n

Be honest about the rate.<\/strong> If there is any reasonable scenario under which a 5% rate isn\u2019t sufficient in five years\u2019 time, say so now. Don\u2019t make promises that can\u2019t be kept. The erosion of public trust in Jersey after the 2011 rate rise did lasting damage.<\/p>\n\n\n\n

Address the spending side too.<\/strong> \u00a350 million of new revenue doesn\u2019t close a reported \u00a3100 million gap. Any credible plan has to include a serious, accountable commitment to expenditure control alongside the tax reform. We\u2019ve seen too many \u201csavings targets\u201d in States budgets that quietly evaporate. A civil service wage bill that was \u00a3318m in 2024 – up from \u00a3216m in 2014 (a rise of 45% compared to RPI during the same period of 38%) demonstrates growth beyond simple pay rises.<\/p>\n\n\n\n

Don\u2019t delay indefinitely.<\/strong> The July 2026 debate is already being talked about as a candidate for postponement. Credit to Deputy De Sausmarez indicating it won\u2019t be delayed. (But the reality is the (now former) political lead is embroiled in very public personal issues). <\/p>\n\n\n\n

Every year of delay costs real money and defers decisions that are only going to get harder. Guernsey has been debating this for the better part of a decade. At some point, not deciding is itself a decision, and not a good one.<\/p>\n\n\n\n

The Bottom Line<\/h2>\n\n\n\n

Guernsey needs to raise more revenue. The numbers are clear, the structural deficit is real, and the reserves we\u2019ve been drawing on to paper over the gap won\u2019t last forever. Equally there needs to be real savings made by our States. People see waste, and that makes selling the concept of GST challenging.<\/p>\n\n\n\n

The question in front of us isn\u2019t really whether something needs to change. It\u2019s what that change looks like, and whether we have the political maturity to design it well and be honest about it.<\/p>\n\n\n\n

Jersey experienced what happens when you introduce a new tax to solve a structural problem and pretend you\u2019ve fixed something you haven\u2019t. Both islands’ finances are being propped up by financial asset gains which can very quickly evaporate. I\u2019d rather we looked that reality in the eye now than spend the next decade discovering it the hard way. <\/p>\n\n\n\n

Jon Bond is Founder and CEO of Evans Bond Limited, an accountancy and advisory practice in Guernsey. He is also a non-executive chairman of CI Co-op and NED at Sark Shipping. The views expressed here are his own.<\/em><\/p>\n\n\n\n

<\/p>\n\n\n

  1. This includes Customs Duties, TRP, Document Duty, and notably all States owned entities and services (Electricity, Aurigny, Guernsey Post, Harbour Fees etc) \u21a9\ufe0e<\/a><\/li>
  2. \u2018GST has been a failure in Jersey\u2019 (https:\/\/guernseypress.com\/opinion\/2022\/12\/12\/gst-has-been-a-failure-in-jersey<\/a>) \u21a9\ufe0e<\/a><\/li>
  3. https:\/\/www.ons.gov.uk\/economy\/inflationandpriceindices\/bulletins\/consumerpriceinflation\/march2026<\/a> \u21a9\ufe0e<\/a><\/li>
  4. https:\/\/www.gov.gg\/CHttpHandler.ashx?id=199792&p=0<\/a> \u21a9\ufe0e<\/a><\/li><\/ol>\n\n\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    The debate surrounding Guernsey’s proposed goods and services tax (GST) highlights the urgent need for fiscal reform due to a structural deficit nearing \u00a3100 million. While GST aims to broaden the tax base, lessons from Jersey’s implementation warn against superficial fixes. Addressing both taxation and expenditure is crucial for a sustainable future.<\/p>\n","protected":false},"author":1,"featured_media":38,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"[{\"content\":\"This includes Customs Duties, TRP, Document Duty, and notably all States owned entities and services (Electricity, Aurigny, Guernsey Post, Harbour Fees etc)\",\"id\":\"38df2850-d1b8-47c9-a18d-7c9bc52fb639\"},{\"content\":\"\u2018GST has been a failure in Jersey\u2019 (https:\/\/guernseypress.com\/opinion\/2022\/12\/12\/gst-has-been-a-failure-in-jersey<\/a>)\",\"id\":\"f7d01e5f-3ced-431b-8db7-6d07bbdd2572\"},{\"content\":\"https:\/\/www.ons.gov.uk\/economy\/inflationandpriceindices\/bulletins\/consumerpriceinflation\/march2026<\/a>\",\"id\":\"a2110358-2566-44db-a77e-df03819247e5\"},{\"content\":\"https:\/\/www.gov.gg\/CHttpHandler.ashx?id=199792&p=0<\/a>\",\"id\":\"b583bd67-afb0-4290-9111-1f6c9c69f57b\"}]","jetpack_post_was_ever_published":false},"categories":[4,7],"tags":[11,10,13,14,12],"class_list":["post-34","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-smallbusiness","tag-gst","tag-guernsey","tag-income-tax","tag-public-services","tag-tax-base"],"jetpack_featured_media_url":"https:\/\/jonbond.biz\/wp-content\/uploads\/2026\/05\/img_2249.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/posts\/34","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/comments?post=34"}],"version-history":[{"count":8,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/posts\/34\/revisions"}],"predecessor-version":[{"id":52,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/posts\/34\/revisions\/52"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/media\/38"}],"wp:attachment":[{"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/media?parent=34"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/categories?post=34"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jonbond.biz\/index.php\/wp-json\/wp\/v2\/tags?post=34"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}