No GST until July 2027 as vote delayed on taxing food
JULY 2027 is now the earliest date that a goods and services tax could be introduced in the Bailiwick.
The start date has been pushed back by at least six months following more detailed preparatory work by treasury officials.
And the delay will be longer than six months if the new States elected this summer fails to decide quickly whether GST should be levied on food, after Policy & Resources yesterday ruled out asking the current Assembly to settle that issue before its term ends in June.
‘If the next Assembly continues to endorse GST, our belief as a committee is that it is unlikely to become functional until July 2027,’ said P&R president Lyndon Trott, during his committee’s appearance at a Scrutiny public hearing.
‘We think it has slipped by six months, but we do not anticipate that it will slip further than that.
‘We are giving it the emphasis and priority that the States has directed us to give it as if all five members of P&R believed it was the right solution and voted for it, and there is no doubt that I’m comfortable with the importance we’re giving it.’
In November, the States directed P&R to develop a package known as ‘GST-plus’ – which includes 5% GST and reductions in income tax and social security contributions – to be introduced from the start of 2027.
However, it also directed P&R to examine whether to make food exempt from GST, which would require increasing the rate on all other items to 6% to raise the same additional revenue of approximately £50m. a year.
The Scrutiny panel did not press P&R on why it would not ask the current States to make the decision on food. But it was clear that any hesitation from the next Assembly on that issue would push the start date for GST into the second half of the next political term, further worsening the precarious state of public finances.
‘The committee has considered several papers on GST and has approved funding to progress the programme and resources are being recruited and project teams are being established,’ said States treasurer Bethan Haines.
‘In terms of the detailed planning, there is one consideration which will need to come before the new States, which is whether GST is or is not going to be applicable to food.
‘It is such a critical decision that until that has been made some of the other elements of the project can’t flow.
‘That’s why we think 1 July 2027 is a more realistic date.’
Deputy Trott and his vice-president, Deputy Heidi Soulsby, have both said recently that GST would need to climb well above 5% to replenish States reserves being used to fund ongoing deficits.
But another P&R member, Deputy Jonathan Le Tocq, distanced himself from that position at yesterday’s hearing, and said he was not convinced that a rate higher than 5% would be needed.
