This Is Guernsey

By Nick Mann

COMPANIES benefiting from zero-10 will be hit hardest by property tax. Tax on Real Property is introduced from next year to replace tax on rateable value, with regulated finance companies facing a four-fold increase.

And there could be more to come.

Domestic property rates, however, will not go up under the measures announced in this year’s Budget.

‘We believe that wherever possible the beneficiaries of zero-10, of corporate tax reform, should be targeted,’ said Treasury minister Lyndon Trott.

‘However, that has to be against the analysis of where the headroom exists. We know that in financial services, an international banking operation in the City of London would be expecting to be paying rates 30 times higher than they do in Guernsey. Therefore, an increase of four times doesn’t seem unreasonable.’

He said there was room for further rises in that sector.

‘It will depend on the performance of the economy overall how much of that headroom needs to be used,’ said Deputy Trott.

Commercial, utilities and recreational and sporting building and land will attract a 100% increase.

Treasury is recommending that for Guernsey properties, the 2008 TRP rates are not increased for domestic, horticultural or agricultural buildings or land.

Overall, the measures will raise £3.9m.

Treasury member Graham Guille said the new system was more transparent and equitable than tax on rateable value.

Because of the subjectivity of the old assessment method, some properties will face a greater or lesser increase.

There are about 20,000 domestic properties and it is anticipated that 80% will have a TRP bill that is either less than the TRV bill or increased by less than £20.

Estimates suggest that 7,500 domestic properties will have TRP bills of more than £100 per annum and fewer than 2,000 domestic properties will have TRP bills greater than £200 a year.