Successful amendment could see food zero-rated for GST
GST looks set to be kept off food – if it is introduced at all. But such a move could lead to a headline rate of 6%.
The States backed an amendment from John Gollop to zero-rate food sold by retailers, including supermarkets and stalls, as well as books and clothes bought from charity shops.
His proposal will now face a final vote at the end of the States’ ongoing debate on the Tax Review.
Policy & Resources president Peter Ferbrache warned that GST should be set at 6% rather than 5% if food was excluded.
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He opposed the amendment, but the other four members of P&R abstained in the vote, which some saw as offering an opportunity to make GST more palatable to deputies.
It was approved by 22 votes to four, with 13 abstentions.
‘Exempting food would significantly help public acceptance of tax reform and protect food shops and pressurised household incomes,’ said Deputy Gollop.
‘The second purpose is to give exemptions to charities, not just regarding food but books and clothes.
'This is to protect the third sector and their generally not-for-profit community service and fundraising activities.’
Deputy Ferbrache said the States in Jersey had recently rejected a proposal to remove GST from food because of administrative complexity and the loss of income.
‘Nobody wants to tax anything more than is necessary. Nobody wants to tax basic essentials. Nothing is more essential than food and water,’ he said.
‘The balanced package [P&R’s option A] proposes to address that by increasing benefits and lowering income tax for the first £30,000 of earnings.
'That hasn’t sunk in. It doesn’t seem like it is going to sink into a significant number of people, but that is the proposal.’
Deputy Victoria Oliver, backing the amendment, said her greatest concern about GST was including it on food.
‘You need to eat to survive. Food is one of my most expensive costs after my mortgage,’ said Deputy Oliver.
‘You want to try to keep people eating as healthily as possible and adding 5% onto food for those low- to middle-income families is very expensive.
‘Fruit costs me an absolute fortune. I feel really guilty saying to my girls that they are going to have yoghurt tonight rather than fruit, but that is the reality. We have had so many increases in the past two years.’
Deputy Simon Vermeulen said he opposed GST in all forms but particularly on food at a time of such pressure on household budgets.
‘Food inflation is raging. Let’s wake up,’ said Deputy Vermeulen.
‘What sort of a government is it that seeks to put GST of 5% on a loaf of bread when individuals and families are struggling to buy that loaf of bread in the first place? I don’t think now or in two years is going to be right time to start taxing people on their essential food.’
Peter Roffey explained why he had previously opposed GST on food in a previous role as president of the CI Co-op, but would vote against Deputy Gollop’s amendment.
‘You have to be open to evidence. The more I looked at it, yes it is true that people on lower incomes spend a higher percentage of their income on food, but the vast majority of tax relief on food would be going to people who spend a great deal on food and who tend to be better off,’ said Deputy Roffey.
‘It’s better for people on modest incomes to garner that money spent on food by people who might be quite well-to-do, and to use that specifically to focus help on the people who need it so that they can afford fresh fruit, fresh potatoes and fresh vegetables.
‘I do everything in this House through the lens of trying to assist as much as possible people who find it really difficult to survive in our expensive island. I became convinced that having a broad-based GST and using the money from it to really help people who need it most at the bottom was more effective.’
Andrew Taylor said he opposed GST and would vote against it, but that it should be applied to all goods and services if the States decided to introduce it.
‘I won’t be supporting this amendment. I think it would unnecessarily complicate the original proposals.
‘If we do, heaven forbid, end up with GST, it should be as simple to administer as possible,’ said Deputy Taylor.
How they voted ...
... on Deputy John Gollop’s’ amendment to exempt food from GST
For: Deputies Aldwell, Bury, Cameron, De Lisle, Dudley-Owen, Falla, Gabriel, Gollop, Haskins, Inder, Le Tissier, Leadbeater, Matthews, McKenna, Moakes, Oliver, Prow, Queripel, Trott and Vermeulen, and Alderney representatives Roberts and Snowdon. Total: 22.
Against: Deputies Fairclough, Ferbrache, Roffey and Taylor. Total: 4.
Abstained: Deputies Blin, Brouard, Burford, de Sausmarez, Dyke, Helyar, Kazantseva-Miller, Le Tocq, Mahoney, Meerveld, Murray, Soulsby and St Pier. Total: 13.