PLUMMETING interest rates and bank profits could wipe out the equivalent of the GST takings entirely next year.
The Treasury department is bracing itself for a serious hit in tax revenues over the next couple of years as the credit crunch continues to bite. Senior States and finance industry figures have said that the damage could be around £50 million – the equivalent of a full year of the 3% sales tax.
This year’s tax will take a hit from reduced interest rates affecting saving income, reduced business profits, affecting income tax and less retail spending, affecting GST. But next year’s receipts will take a heavier hit for reduced business profits because corporate income tax is based on the previous year’s figures and the 2009 profits are expected to be much lower than those in 2008.
The JEP has spoken to a number of sources in the States and in the finance industry, who put the damage to tax receipts at between £40 million and £70 million.
Pictured: Cyril Le Marquand House, the home of the Treasury