> ## Content Index > Fetch the complete content index at: https://www.thequarry.media/llms.txt > Use this file to discover other available public pages before exploring further. # Business group urges States to raise income tax and cut spending before introducing GST - URL: https://www.thequarry.media/business-group-urges-states-to-raise-income-tax-and-cut-spending-before-introducing-gst/ - Published: 2026-09-28T07:49:00.000Z - Updated: 2026-09-28T10:50:23.000Z - Author: The Quarry - Tags: News - CGi urges States to increase income tax temporarily and cut spending rather than introduce goods and services tax - A 3% income tax increase three years ago would have raised £45 million by 2026, helping to narrow the funding gap - Updated modelling shows GST at 3% would now raise £36 million, down from £39 million previously estimated - CGi warns Revenue Service cannot manage new tax system whilst dealing with significant backlog worsened by individual taxation - Four States committees forecast overspends this year, with HSC seeking tens of millions for Raymond Falla House relocations Listen to this article 0:00 /0 1× The Confederation of Guernsey Industry has called on States members to prioritise spending restraint and temporary income tax increases over the proposed goods and services tax as the island grapples with its structural fiscal deficit. Ahead of the resuming tax reform debate, the business organisation reiterated its position that income tax should form a central part of addressing Guernsey's financial challenges, alongside reductions in spending and measures to stimulate economic growth. Garin Dart, CGi chair, said the organisation has maintained this view for over a decade. He argued that if the States had increased income tax temporarily when debating the 2025 budget in November 2024, the island's finances would be in a healthier position today. "Deputy Parkinson advised the CGi in May that a 1% increase in the rate of income tax would raise £5 million annually. Had this been increased by 3% three years ago, cumulative additional revenue by 2026 would have reached £45 million and made a significant contribution to narrowing the funding gap," Mr Dart said. "We urge deputies to make this change now on a temporary basis, while a sustainable long-term policy is decided - and to discard the proposed goods and services tax, which will harm our economy." The CGi acknowledged that increasing income tax alone will not address every aspect of the island's funding challenges, however it remains an effective and straightforward mechanism. The organisation also expressed concerns about the Revenue Service's capacity to administer an entirely new tax regime whilst managing significant backlogs. It said this situation was made worse by the States decision to introduce individual taxation, and urged deputies not to add to the Revenue Service's workload further until the backlog has been resolved. "We now know that the Revenue Service is managing a backlog that is far larger than had previously been realised. However, the collection systems already exist, changes can be implemented quickly and rates adjusted without creating an entirely new tax administration," Mr Dart said. "Introducing GST before the tax backlog is cleared will add to the workload of the Revenue Service staff and the stress on its systems. Increasing income tax temporarily while the tax backlog is dealt with will also allow us time to ensure we have a true picture of the island's fiscal position before introducing new taxes." Following the publication of updated modelling on GST last week, the CGi expressed further concerns about the impact of introducing the proposed new tax. The modelling shows that the amount of money estimated to be raised by GST at 3% has fallen from £39 million to £36 million. The organisation said the tax reform package proposed by Policy and Resources will therefore not raise the money required to address the island's significant fiscal challenges, and warned that the estimated income may decline further when the modelling is updated to include data from 2025-26. The CGi also noted that it has become clear that Policy and Resources has not brought the States together to back its plans, and that the government remains divided. Whilst Policy and Resources has proposed 1% efficiency savings across the public sector over three years, priority-based budgeting, reviews of expenditure and identifying efficiencies and opportunities for expenditure reduction, it has been reported that four States committees are forecasting overspends for this year. The Health and Social Care committee reportedly wants to spend tens of millions of pounds relocating multiple service areas to Raymond Falla House. The CGi said this shows there is little appetite to make savings, despite clear messaging from the public and businesses that this is needed. The organisation urged deputies to be mindful of this and to act now to cut costs before introducing new taxes. Measures aimed at boosting the island's economy and productivity are welcomed, alongside increases in company registration fees, corporate taxation and the introduction of deferred pensions as part of a broader package of fiscal measures. Mr Dart also emphasised that the CGi does not share the view of other industry groups shared earlier this year suggesting that all businesses support the GST proposals. The organisation said it is hoped that deputies will take the time to consider all amendments lodged for debate, and that a decision will not be rushed simply to fit into the three days allocated for the upcoming debate. ## Q&A **Q: What does CGi propose instead of GST?** A: CGi proposes a temporary increase in income tax alongside spending cuts and measures to stimulate economic growth. The organisation suggests a 3% increase would have raised £45 million cumulatively by 2026 if implemented three years ago. **Q: Why is CGi concerned about the Revenue Service administering GST?** A: CGi says the Revenue Service is managing a backlog far larger than previously realised, made worse by the introduction of individual taxation. The organisation believes introducing GST before the backlog is cleared will add to staff workload and stress on systems. **Q: How much would GST raise according to updated modelling?** A: Updated modelling shows GST at 3% would raise £36 million, down from the previously estimated £39 million. CGi warns this may decline further when modelling includes 2025-26 data.