The States of Alderney has voted in favour of legislation to introduce a Single Property Tax next year.
The Single Property Tax will replace Occupiers’ Rates and the Tax on Real Property (TRP) and will be levied by the States of Alderney instead of Guernsey.
Alderney’s Treasury will also set and collect rates for Document and Fuel Duty from next year. Document and Fuel Duty generates around £760,000 per annum. TRP last year came to around £1m.
It costs around £3m to run Alderney every year. That money currently comes from Occupiers’ Rates and other small locally set charges, plus an annual top up grant from the States of Guernsey called the Revenue Grant. This year’s Revenue Grant came to £1.88m.
The combined takings pay for functions such as refuse collection and recycling, grass cutting, road maintenance and for the Harbour. It also funds the Island’s Civil Service.
The Single Property Tax, along with Document and Fuel Duty, is expected to meet the shortfall between the cost of running the Island and the local income it draws, and the Revenue Grant will fall away.
Speaking at this month ‘s States Meeting, James Dent, chairman of the Policy and Finance Committee, said Alderney-set property rates would give the Island more control over its finances and ultimately greater independence.
‘It will allow Alderney to set rates and categorise properties in a manner that reflects the needs of our own economy, and our situation, rather than that of Guernsey.’
A case in point, he said, was where the Bailiwick-wide approach to setting TRP had been to charge the highest rates on business types that in Guernsey have been able to pay – typically finance houses.
At the People’s Meeting Mr Dent suggested that rates on Alderney might be ‘rebalanced’ by charging second home owners higher rates than before.
He stressed that there existed a mechanism within the 1948 Agreement whereby in the event of exceptional events affecting income – such as an outbreak of Covid 19 – Guernsey could still be approached for grant support from the Revenue Reserve. Discussions with Treasury and Resources had confirmed that provision. Alderney will also be given a small grant for 2021 to cover any shortfall while new system beds in.
Mr Dent said that in 2021 residents would see little difference in their bill from last year.
This month’s People’s Meeting however saw concerns expressed that any subsequent ‘rebalancing’ of taxes in favour of businesses would mean a heavier tariff for residents . At the States Meeting several States Members cautioned against any hike in charges once it was in Alderney’s control.
Alex Snowdon reminded the chamber that TRP last year climbed by 10 per cent and Occupiers’ Rates by five per cent. Any further increases would inch the Island closer to rates set in the UK.
He told members that a property of 300 units – the size of a three-bedroom house attracted a combined TRP and Occupiers’ Rate bill of £1,137 per year. The rates for a two bedroom property in Sussex was £1,400 – and the UK offered discounts for single occupancy.
Any further raises to the cost of living would drive young families from the Island, he warned.
‘The cost of living in Alderney is already high. Our electricity prices are more than twice those of the UK and Guernsey and the cost of food and groceries can be around £200 per week for a family of four with small children.
‘We don’t want to lose young families who are struggling to meeting costs. I would be very cautious about tax increases.
‘We have already been told on a States of Alderney Press Release that funding for the ambulance service will come from the Single Property Tax.
‘With no other ideas from the States of Alderney about making money it will be tempting to increase income by raising the Single Property Tax’.
Louis Jean was also uneasy about the States of Alderney taking on new powers.
He said consultation should take place with the public first.
The States voted 9-1 in favour of a draft Projet de Loi called ‘The Alderney Property Tax (Enabling Legislation) Law 2020 and to petition HM the Queen to sanction it.