Guernsey faces tax hikes to fill £75 million shortfall

People in Guernsey could soon pay more in tax.

It is after the government announced a review that will likely raise taxes to meet the increased costs of dealing with the pandemic and looking after an ageing population.

They say up to £75 million may need to be raised, which is nearly a quarter of Guernsey's GDP.

Ideas include a potential health tax and introducing a Goods and Services Tax (GST) - already used in Jersey - with protection for low-income households.

It will be debated by the States on 29 September.

The tax review will consider these three options:

• Option 1

- Apply an income-based health tax at 3%.

- Change the Social Security system and use this to raise more money.

• Option 2

- Apply GST that will gradually increase to up to 8%, with measures to protect low-income households.

- Increase the personal income tax allowance.

- Change the Social Security system but without raising any more money.

• Option 3

- Apply GST that will gradually increase to up to 5%, with smaller measures to protect low-income households.

- Make a smaller increase in the personal income tax allowance.

- Change the Social Security system and use this to raise more money.

Each of these options assumes that extra money will be made through changes to the corporate tax system.