Retail, hospitality react with concern at introduction of GST

OWNERS of retail and hospitality businesses have given a gloomy reaction to plans for a GST.

States treasurer Bethan Haines explains the options. (Picture by Sophie Rabey, 29820378)
States treasurer Bethan Haines explains the options. (Picture by Sophie Rabey, 29820378)

The States held a presentation of its tax proposals last for week for industry and third sector organisations.

Mark Helyar, the treasury lead on Policy & Resources, acknowledged that they had not gone down well with some sectors.

‘Yes, I think the retail and hospitality sectors are not keen on GST as a rule, but it has to come from somewhere. It will come from business in one way or another, or out of people’s salaries. We can’t square the circle, the tax has to be raised in some way.

‘One of the benefits of a GST is that it removes the almost complete emphasis we have at the moment on income. If income goes down so do taxes, but the social services that we have to pay for stay at the same rate, so we are in quite a dangerous position from that perspective.’

Guernsey often markets itself to tourists as a GST-free zone, and it is thought to add to the island’s unique and special status.

Under option two, an 8% GST, it is estimated that tourists would pay £10m. a year through this tax.

With option three, a 5% GST, tourists would bring in £6m.

Local retailers have asked the States to ensure a level playing field between themselves, who would have to charge GST on their goods, while online competitors from outside the island would not.

Deputy Helyar said it was something the States would be investigating.

‘The exemption limit that currently applies in Jersey is £135, so if you do order something that’s over that you do have to pay GST.

‘And Jersey is in discussions with Amazon at the moment over whether they will apply Jersey GST at the point of source, so a customer would pay the GST when you bought your parcel.

‘We’ve had quite a bit of feedback from the retail sector that they’re concerned at the impact of GST on their operations, particularly because people will still be able to buy online at the rate below the de minimis level to their detriment, and we are looking at possible options for counteracting that.’

One assurance that can be given to retail and hospitality is that the changes will not happen soon, and Deputy Helyar stressed that if GST was approved it would be phased in.

‘Certainly, being in a recovery after an economic shock, raising taxes is the wrong thing to do.

‘Punishing an economy that’s recovering is a difficult thing to do, and that’s why we’re saying that there’s no prospect of any of this happening until at least 2024, and when it does it will be gentle rather than a sudden jump in taxation, because the economy needs to be protected in the meantime.’

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