Guernsey has opened a discussion into ways of funding the body that markets its financial industry, and is likely to move to a system whereby companies would pay an annual fee equivalent to £75 per employee.
The consultation, which continues until 12 June, comes after Guernsey’s move to a 0% rate of corporation tax in 2008. Banks and other financial services pay 10% on their regulated business, while income from Guernsey property is charged at 20%. Utilities also pay 20% on their regulated business.
The discussion also comes as tax revenues have been reduced by the economic downturn.
The 2009 budget for Guernsey Finance is £1.2 million, according to the organisation’s chief executive, Peter Niven.
“This has been coming for the last two years,” Niven said. “Industry has already been consulted informally on a number of occasions… Now government are formally consulting.”
Businesses ‘disappointed’
Some of Guernsey businesses have expressed disappointment at being asked to pay, but it is not the first time such a scheme has operated. When Guernsey Finance was set up in 2001, the finance industry helped to fund it, but this was discontinued in 2003 after the administrative complexities of the collection process became too great, Niven, who was not there at the time, said.
If a £75 per full-time-equivalent staff member fee is adopted, it would be capped at £7,500 per company, Niven added.
Both Jersey and the Isle of Man have similar marketing organisations. Jersey Finance is funded by a combination of industry contributions and the government, while Isle of Man Finance – which has a budget for the year ending on 31 March 2010 of £1.084m – is fully funded by the island’s taxpayers.
Once a funding plan is passed by Guernsey lawmakers, it must get Privy Council approval before being enacted. Niven said this means that funding for 2009 and 2010 may be collected in one go at the beginning of next year.
In an article on the Guernsey Press and Star website last month, a member of the Guernsey International Business Association said that the island’s financial sector had already contributed “heavily” to Guernsey Finance with time and money.
“The industry undertakes all of this support at its own cost, which has been estimated to be at least £500,000 per annum,” Mike de Haaff was quoted as saying.
