Sir
Members of the Assembly will know that I have long held the view that corporate tax reform has the potential to play a significant role in addressing our financial challenges. That is why I am delighted that my colleagues on the Policy & Resources Committee asked me to lead the work of a Tax Review Sub-Committee which will examine the options for addressing our structural deficit and will in large part focus on corporate tax.
Over the next few months, P&R will be running two separate but linked workstreams with the intention of enabling this Assembly to make a final decision, once and for all, before the end of Quarter 2 next year on the tax reform option or options it wishes to implement.
The first of these workstreams is the Sub-Committee charged with delivering recommendations to the Policy & Resources Committee regarding the best overall package of sustainable revenue raising measures.
At the heart of this Sub-Committee’s work will be a detailed examination of the taxation of company profits and whether a system of territorial corporate tax should be implemented. It is of utmost importance to stress that this work will have due regard to the need to maintain a tax system which is competitive, internationally acceptable and maintains tax neutrality.
The Sub-Committee will also review the tax package which has become known as ‘GST Plus’ and which was agreed by the last Assembly (to which I’ll return in a moment).
Given the amount of work already undertaken over the last decade in examining our tax system and possible additions or replacements, the Sub-Committee will have ample material on which to draw. However - with this in mind - it has also been decided to specifically exclude certain workstreams which have already been examined and discounted. These include changes to personal income tax rates and the introduction of capital taxes, including inheritance tax.
The Sub-Committee has been tasked with following a set of principles in arriving at its recommendations. These include, amongst others:
- that the tax system must be capable of raising the revenues needed to balance public finances over the next 10 years;
- that it should be resilient to demographic changes; and
- that it should create reasonable certainty and stability to enable businesses and individuals to plan for the future.
The full terms of reference for the Sub-Committee have been published on the States’ website today and contain the full list of principles.
As I have already said, I will be chairing the Sub-Committee and will be joined by the Vice President of the Policy & Resources Committee, Deputy St Pier.
In addition, I’m delighted to report that we have three international tax policy experts joining us on the Sub-Committee:
- Mr Bill Dodwell who was Head of Tax Policy at Deloitte between 2005 and 2018, and has been President of the Chartered Institute of Taxation and Tax Director at the Office for Tax Simplification;
- Professor Peter Harris, a lawyer whose primary academic interest is in international, corporate and comparative tax law. He is Professor of Tax Law at the University of Cambridge has acted as Technical Assistance Advisor for the IMF since 1998; and
- Mr Mike Williams, former Director of Business and International Tax at HM Treasury where he was responsible for all business taxes, including company tax and value added tax.
These experts not only have enormous experience but also are independent in the matter of our tax system, so they will give impartial advice which is important to the credibility of this process.Further, we have secured the expertise of Mr Tony Mancini, former tax partner at KPMG who was Head of Tax for the Crown Dependencies until his recent retirement, as an advisor to the Sub-Committee.
I have also given a commitment that the Sub-Committee will engage with States Members through the development of its proposals, will have open meetings when practical and helpful and that I will (subject to permission from you Sir) update this Assembly on a regular basis.
We are hoping to complete our work in Quarter 1 2026 with a draft policy letter for the Policy & Resources Committee.
The second of the two tax workstreams being progressed by the Policy & Resources Committee is the package which has become known as ‘GST Plus’. That includes the introduction of a GST but importantly – and arguably too often missed out of discussion – reforms to income tax and social security that mitigate the impact of GST, particularly for the less well-off members of our community. This was the package approved by the last Assembly.
We do not as yet know whether this package will form part of our final proposals. However, given the significant lead in time and the policy decisions which remain outstanding, it is essential to keep planning for its implementation. This will mean that early next year we will be asking the Assembly to consider those outstanding policy decisions – including, for example, whether GST would be added to food or not. We will being doing so purely to ensure that we have a full GST plus package ready to go IF the States later decide to proceed with it.
Sir, members may also be interested to know that I understand you have given permission for Deputy St Pier to provide the States with a statement at its next meeting updatingmembers on the States’ financial performance in 2025 ahead of the publication of the 2026 Budget on 7 October.This will help provide context of the fiscal challenges we face, emphasising that the status quo is unsustainable.
Sir, we appreciate that there is a lot going on in the tax reform space and that it is a highly technical field with plenty of acronyms and terminology. To that end, we have updated the website with additional information including an infographic of how everything fits together, and I am more than happy to take any questions Members may have.