Friday 20 October 2023
The Policy & Resources Committee has been listening to representations from the business community regarding one of the 2024 Budget proposals which recommends the phasing out of tax relief on loan interest for the acquisition, construction or repair of a let commercial property.
Businesses have raised concerns and provided details about some of the very small profit margins involved in key development projects where removing this relief, albeit in a phased way, could act as a significant disincentive and could be the difference in whether a project is commercially viable or not.
The Committee is having to make some difficult recommendations given the ongoing unsustainably of the island's finances and has been examining all opportunities for raising additional revenues, including looking at all tax allowances and reliefs. But it has listened carefully to these representations and come to the view that it would be better not to introduce a measure at this stage which may deter private development in this way. Therefore, it will be asking the States to reject this specific proposition when the Budget is debated in November.
Deputy Mark Helyar, Treasury lead for the Policy & Resources Committee, said
"We already have a situation where there has been significant under-investment in our public infrastructure for years. A lack of investment in Guernsey's infrastructure undermines growth in the economy, and thankfully even though the States has not invested nearly enough, some significant private developments have gone ahead which show there continues to be good confidence in the local economy.
We do not want to deter that sort of investment, it supports local industries and provides new business and social facilities. In fact, the underlying intention of this budget is to encourage better use of both domestic and commercial properties, hence our proposals to increase the TRP on those which are unused or derelict. The business representatives who we have spoken to have made a good case for why removing this tax relief would not support that objective and so we will ask the States not to approve this proposition."