Guernsey proposed a £2,500-plus charge on cars over £50,000 and a 3 per cent GST from 2028

Guernsey’s Policy & Resources Committee published its 2026 Tax Reform Package on 8 June 2026, proposing a surcharge on high-value private vehicles above £50,000, added to first registration duty with charges starting at £2,500, and a goods and services tax (GST) of 3 per cent from 2028, in measures it said would improve public finances by an estimated £59m a year if the States agreed them in July.

The £59m includes at least £20m a year of spending reductions the States had already agreed and £39m in additional revenue. The committee said Guernsey has had a funding gap for nearly two decades, that reserves have been seriously depleted, and that on its projections they would be completely used up in a few short years.

The income tax changes would cut the basic rate of personal income tax to 15 per cent on income up to £28,000, with 20 per cent applied above that threshold, and raise the personal allowance by £600. A change to social security contributions would raise £2m a year.

Pensions, income support and other benefits would rise to cover higher prices, with the increases introduced ahead of GST. A new annual Essential Costs Relief Payment would also be introduced.

The committee’s policy letter of 12 January 2026 had proposed a 5 per cent GST on most goods and services, including food, with only a small number of exemptions. The June package cut the rate to 3 per cent to limit the effect on the cost of living.

Updated modelling published on 22 September 2026 put net additional revenue at about £36m a year, compared with the £39m in the June package. The main reason was that a 3 per cent GST would raise less than first estimated.