Guernsey Budget 2027: £15m growth fund and fuel duty hikes

£15m will be invested in a fund aimed at growing Guernsey's economy as part of Budget proposals, which also include a 4.3% rise in fuel duty,

A 'Budget for growth' is how proposals for 2027 are being dubbed by the island's senior States committee.

It includes plans to create a £15m Economic Growth fund aimed at growing Guernsey's economy over the next three years.

The money will come from a corporate tax windfall Guernsey's States has received.

The government is receiving much more from the new Pillar Two global minimum corporate income tax than it expected. Multinational companies that make more than 750 million euros - which now have to pay 15%.

Last week it was revealed receipts are expected to be twice as much as expected, at almost £80m.

Some of that revenue will be used to support projects that can 'demonstrate clear and measurable economic benefits and value for money.'

P&R is also committing to introducing a Entrepreneur Tax Cap to help attract entrepreneurs and new business activity to the Bailiwick.

In terms of how the proposals will affect islanders' pockets, Personal Income Tax Allowance will be increased by £650 to £15,850.

Fuel Duty will increase by 4.3%, putting an extra 3.9p per litre on the price at the pumps.  This is despite calls for a fuel duty freeze, or even a cut, to counter the soaring cost of filling up due to the conflict in the Middle East.

Tobacco Duty will increase by 9.3%, putting 89p on a packet of 20 cigarettes.

Alcohol duty will rise too, but there will be a so-called 'tap relief' to reduce duty on draft beer, cider and wine in bars and restaurants to ease the strain on the hospitality sector.  That will cost £342k.

P&R says it is working with the Housing Committee on so-called 'targeted measures' to support first-time buyers and younger homeowners. However, existing homeowners face a phasing out over three years of Mortgage Interest Relief for Principal Private Residences.

There will be inflation-linked increases in Domestic TRP and the majority of commercial TRP tariffs.  Rates for the hostelry, retail and warehousing sectors would be frozen.

Deputy Charles Parkinson, Treasury Lead for the Policy & Resources Committee, said:

"This Budget recognises a simple reality: sustainable public finances and a strong economy go hand in hand. While we must continue to exercise restraint and improve the efficiency of public services, we also need to invest in the long-term success of the Bailiwick."

The budget proposals will be debated in the Assembly later this year.

Last week, the States narrowly approved a tax reform package that includes the introduction of a 3% GST in 2029.