Fiscal strategy review launched over Zero 10

Friday 16 October 2009

Guernsey’s zero-10 corporate tax regime was introduced on 1 January 2008.

Officials from the UK Treasury had sight of the new regime and they confirmed that it was compliant with international standards and the EU Code of Conduct.

Jersey and the Isle of Man followed a broadly similar approach.

However all three Crown Dependencies recognise that the recent and unprecedented changes in the world economy have led to shifts in perceptions and attitudes across the globe.

At meetings held today [Tuesday 13 October] between the Crown Dependencies and Stephen Timms MP, Financial Secretary to the Treasury, it became apparent that these changes in attitudes mean that other EU Member States are unlikely to accept the stance of the UK that our fiscal regimes are code compliant.

Chief Minister Lyndon Trott said:

‘Our Zero-Ten strategy was always intended to be a multi-stage process, in order to ensure that our tax revenues are sufficiently sustainable in the light of changing economic uncertainties.

‘As a result of the changes in international attitudes, the terms of consultation on this issue will be broader than had previously been envisaged, and will aim, working with the UK and other EU Member States, to ensure that our fiscal regime remains competitive and within international standards.’

It has been agreed that all the Crown Dependencies will face up to these issues together, working together and sharing resources. Due to their geographic and political similarities Guernsey and Jersey will be working closely together on the political aspects of the consultation.

The review in Guernsey will be carried out through the Policy Council’s Fiscal and Economic Policy Group, chaired by the Chief Minister. Technical work will be led by the Treasury and Resources Department.

Treasury and Resources Minister Charles Parkinson said:

‘Guernsey is committed to reviewing its fiscal strategy after the first phase of zero-10, and I have advised the States on several occasions that we will announce the measures proposed to deal with our structural deficit at the end of this year.

‘I am pleased that we will now be undertaking this review alongside our colleagues from Jersey, with the intention that there should be no significant differences between the corporate tax regimes of the two islands.’

Deputy Trott added:

‘It is my intention to first brief States members in detail later this week, after which I will be available, together with the Treasury and Resources Minister, to answer further questions from interested parties and to ensure there are no misunderstandings as to the process.’