TREASURY minister Lyndon Trott’s view of Guernsey’s economic prospects is optimistic, according to his counterpart in Jersey. From next year, Guernsey law will allow the introduction of a goods and services tax to offset the revenue loss from the abolition of corporation tax in 2008, although there are no plans at present to implement that.

Jersey residents will pay a 3% tax on purchases.

Jersey’s Treasury minister, Terry Le Sueur, said Deputy Trott’s claim that that would give Guernsey a competitive advantage over Jersey was looking on the bright side. Any advantage that Guernsey might gain from not having a goods and services tax would be small because of other costs of doing business in the island, such as rents and social security.

‘If they ‘Guernsey’ can sustain that level of growth, they will be doing very well, but it is still, in my view, rather a risky long-term approach,’ said Senator Le Sueur.

‘There is no chance we will not need a GST. Guernsey acknowledges that if their growth is not maintained, they want to have GST there as a standby.’

He accepted that the lack of a GST was something that Guernsey could use as a marketing tool.

‘But in the long run, the cost of doing business is made up of a variety of components and GST at 3% will not necessarily have a big effect on that,’ said Senator Le Sueur.

Deputy Trott told an Institute of Directors seminar last week that having a GST on the statute books would be an advantage but he did not think the need would arise to implement it.

‘If growth continues at 2006 levels, we will be able to balance the books by using just that and interest on the contingency reserve,’ he said. ‘But I’m the first to admit that it is a big if.’

Guernsey companies will pay no tax from next year, apart from certain finance firms, which will pay 10%. Shareholders will instead pay tax on company profits as personal income.