Charities fear having to charge GST to customers
GST proposals could see some local charities having to charge tax on goods and services they provide.
The tax review policy letter, which is set to be debated this month, proposes a flat rate of 5% GST applied, with few exemptions to keep it simple.
For charities, Guernsey is looking to follow the same structure as New Zealand where any charitable income from bequests, donations, subsidies or the sale of donated goods and services are exempt, but the sale of purchased goods and other trading activities is liable for GST.
This is in contrast to Jersey which provides a blanket exemption for charitable activities. By this definition those affected will include the charity which runs the Mill Street Community Cafe, where GST will have to be added to food prices, and the GSPCA will have to charge GST on shop sales, and services such as boarding.
The cafe, which aims to provide a ‘safe place’ in the community, offers set prices for food, but people who cannot afford it can give a donation instead.
Director David Savident was unhappy with the proposals.
‘We have been striving and striving to keep our prices down so the poor can afford it,’ he said.
‘We are not like the other restaurants in the road. All our staff are volunteers, we provide a completed different service. We are somewhere where the vulnerable can feel welcome, where people can get a nutritious warming meal and see a friendly face.
‘We have had a very successful Christmas fundraising campaign that has allowed us to keep our prices the same despite food inflation. Bang on GST and we won’t be able to swallow the cost. I would certainly support and applaud any amendment to make all charities exempt from GST.’
He was worried that people on middle incomes would be left struggling. ‘And personally I am not a supporter of GST either.’
GSPCA manager Steve Byrne said that the charity, along with many others, had experienced a difficult few years from Covid to the cost-of-living crisis.
‘From buying animal feed to heating kennels, vet fees to buying cleaning goods, at all levels we have seen the biggest rise in costs in our 150-year history and introducing a new tax to increase tax, and decrease income such as our shop sales, goods and other services such as boarding, and the very emotive service we provide to bereaved pet owners, is a very real concern for the GSPCA as it is for many charities,’ he said.
Mr Byrne said that the charity spent more than £2,700 a day providing a 24-hour-a-day, seven-days-a-week service and caring for up to 500 animals in its care at any one time.
‘This directly affects how charities are able to bring in income. The GSPCA and hundreds of charities work so hard to help our community to do what they can.
‘They save the States money in so many ways and to cause issues with income streams and increase costs will without doubt put pressure on every charity and good cause in Guernsey.’
Those not affected by the introduction of GST include charities selling only donated items, such as the charity Go, which sells second-hand furniture and homeware items.
Deputy general manager Michael Bougourd said that financially GST would not affect Go. ‘The knock-on is that for us it may have a positive effect, as more people may look to second-hand and we will, by comparison, be less expensive,’ he said.
‘That’s as a business, as individuals the effect will probably be negative.’
No one from the Guernsey Association of Charities was available for comment.