Guernsey politician calls for end to zero-ten “scam”

Monday 04 October 2021

A Guernsey Deputy has launched a scathing attack on the island’s zero-ten regime during a debate on the future of the island’s tax system.

Deputy Charles Parkinson lambasted the suggestion of introducing a GST until the corporate tax situation "has been sorted out", something he does not believe the States' senior politicians have the competence to do.

"The people of Guernsey have suffered enough since 2008,” he said.

“Guernsey’s fiscal problems began in 2008 with the introduction of zero-10 – we will start to solve the problem when we fix that.”

Deputy Parkinson took issue with some of the claims made by the Treasury Lead of the island’s Policy and Resources Committee, Deputy Mark Helyard, who said that any reform of corporate tax could adversely affect the finance sector.

“These remarks tell me two things; firstly, he does not understand corporate tax, and secondly he has done no serious work on the amount corporate tax could potentially raise,” said Deputy Parkinson.

“When people say this would make us uncompetitive, they just don’t understand – they don’t know what they’re talking about,” he continued.

Deputy Parkinson argued for a type of corporate tax called territorial income tax, which would force taxation only on Guernsey-based income. This, he said, would not affect the banks since most of their income is not made on-island.

This would be a direct alternative to Guernsey’s current policy of zero-10, which sees most companies locally pay 0% corporation tax, while finance firms pay 10%.

Jersey also operates a zero-ten system.

Deputy Parkinson went on to say some of the loopholes that exist under the current system allow some businesses to avoid paying their fair share.

“[Under the current system] there’s a huge incentive for local companies to keep their profits in the company and not pay a dividend, because as soon as they do they have to pay 20% tax on it.

“As long as it’s sat in the company minding its own business they don’t have to pay any tax at all, and ‘surprise, surprise’ some of these companies go out and buy corporate jets or ski chalets in Switzerland.

“This simply avoids them having to pay money to the shareholders and they get the use of some corporate toy for some nominal amount and frankly we just allow this scam against the States of Guernsey to go on and it's time it stopped,” he said.

The debate over whether GST should be introduced in Guernsey did not conclude last week as expected, and will start up again in a fortnight.