TREASURY minister Charles Parkinson today unveiled a conservative Budget as he admitted for the first time that the island was sliding into recession.

The worldwide situation was getting worse than anyone had expected, he said, but Guernsey would probably see a shorter and milder downturn than the UK.

But the big surprise is a recommended RPI rise in personal income tax allowances for the next two years that would overturn last year’s States decision that they should be held in 2009.

Elsewhere, motorists, smokers and drinkers are all hit with duty rises and the beneficiaries of zero-10 – businesses – are again targeted with a large rise in property tax.

‘This is such a conservative Budget: it’s really last year plus a little bit and in that sense we’ve just assumed the economy will continue – and tax paid by individuals will continue – to increase and budgeted accordingly, but that’s a big assumption,’ said Deputy Parkinson.

Proposals in brief

• A 5.5% increase in personal income tax allowance for 2009, taking that for a single person to £8,700, and a further 4% rise in 2010.
• Duty on cigarettes up 8.5% – 21p on a pack of 20.
• Alcohol duty to rise by 5.5% – less than 2p on a pint of beer and 7p on a bottle of wine.
• Road fuel duty up by 2p per litre.
• Property tax increases of 5.5% for domestic, 25% for offices and 50% for the financial services industry.
• A withdrawal of £8m. from the Contingency Reserve Fund in 2009.