The impact and cost implications for introduction of GST

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WRITTEN QUESTION TO THE MINISTER FOR TREASURY AND RESOURCES BY DEPUTY G.C.L. BAUDAINS OF ST. CLEMENT

ANSWER TO BE TABLED ON MONDAY 16th JULY 2007 Question

Would the Minister advise, in relation to the proposed GST, his latest calculations regarding – ( a ) the cost of administration (in both manpower and monetary terms);

( b ) the sum needed to top up Low Income Support;

( c ) the total increase in the revenue and capital expenditure of the Island over the next five years as a result

of introducing GST (inclusive of the costs outlined in (a))?

Answer

1. At this stage of the implementation process I am pleased to report that weare still working within the original estimate / projection which was provided by Crown Agents in its final report "Design of a Prototype GST" published in January 2005. The report estimated 10 additional staff would be required – five for Customsand Immigration and five forIncome Tax. This will equate to anincreasein recurrent expenditure, for staff and non-staffcosts, in a full year of around £1 million. So far in 2007 five staff members have been recruited and are now in post – three for Income tax and two for Customs and Immigration. Further staff will be recruited as / when required in theleadup to the target GST start date of late April / earlyMay2008.The estimated additional staff numbersaremainlydependenton a simpleGST system being adopted bythe States and the deploymentofmodernICT to support the administration bythe agencies andcomplianceby the taxpayers. I am very consciousof a numberof factors (including the de minimisvaluefor imports) that couldimpactonmanpower resources and we have requestedCrownAgents to perform a review / manpowerauditbasedondevelopmentsto date. The first stage ofthereviewwas completed inJuneand the report is due soon and will bemade available to States Members.
2. Currently wehave £1.75 million in place fortheonsetofGST. This figure will be revised when we know the increased rates of benefit that will apply from October 2007 and therefore IncomeSupport from January 2008.
3. W e anticipate that theongoing revenue costsfor2008 – 2012 will be maintained at £1million perannum excluding any pay awards over the next five years. The capital expenditure estimated from 1st January 2007 to completion of the implementation ofGST, including ITsystems for both Customs and Income Tax is £1,569,500. These are one-offcosts.