Taking GST off food just increases the tax burden

Tuesday 16th September 2008, 3:00PM BST.

From Deputy Sarah Ferguson,
Chairman, States Public Accounts Committee.
I THINK perhaps your readers deserve an explanation as to why Deputy Le Fondré’s proposition is superior to that of the Deputy of Grouville.

We have mechanisms for supporting those under income support and non-taxpayers. There will be no new people being brought into income support, just an increase in the amounts paid to them.

A low, simple, widespread consumer tax has the following advantages:
It spreads the tax burden across the whole population, which is especially important in 20 years’ time when the age spread in the population will be biased towards the old. This will result in a lower tax burden on the young.
Otherwise, the tax for those in work will have to go up or we will need to increase the number of immigrants.

The broad-based tax will mitigate the need to go for substantial immigration in order to have enough people to support the old.

The section of the population suffering most is that which is subject to marginal relief. They never get the full benefit in a growing economy and always lose out in a contracting one. They are the ones with the two children and a mortgage – Middle Jersey.

If we change the marginal rate from 27% to 26%, this is a 3.8% change in the rate and will cost £2.2 million. It will go straight into their pockets and can be done quickly once it has come to the States. This is, I think, allowable under the FPP report, and if the Treasury Minister doesn’t bring it to the States in December, I will.

What this means is that, together with the other measures proposed in Projet 138, we will be benefiting the lower-income groups, focusing on some of the hardest-hit, at a significantly lower cost than the scattergun approach of removing GST on food. Much better value for money and much more efficient.

What is wrong with putting money directly back in people’s pockets for them to spend as they wish? Removing GST on food merely increases the complexity and, eventually, the total tax burden.
Soleil d’Hiver,
Mont Sohier,
St Brelade.

1
sorvaD

September 16, 2008 at 3:46 pm

She is just covering her back.
Obviously worried about the effect her constant voting PRO GST will have on her Senator’s campaign.

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2
Jeremy Maçon

September 18, 2008 at 8:55 pm

There are other ways of raising funds other than GST – here are a few suggestions:

1) It’s ridiculous that the burden of funding the deficit from removing the £600 exempt tax from foreign owned companies should fall upon the ordinary taxpayer. Jersey owned resident companies are not being treated in the same manner (although they are generally very small operations) and will be hit with the Deemed Distributed Law in 2009, driving some out of business – how is this a “level playing field”? Our government was very quick to legislate for a way to exploit Jersey owned Jersey companies and had they wanted to they could soon have found another means of making these foreign owned companies pay the pittance of £600 without alienating them or antagonising the OECD. The fact is that our government does not look after its own people and implemented GST with little thought as to the consequences to the ordinary people – they simply did not care.

2) We could also raise or even remove the Social Security ceiling (at present it is 6% up to £40K – e.g. if you earn £80K you are essentially paying 3% – is this fair?)

3) Make 1(1)Ks pay what they agreed to pay to get their licence and if they don’t pay it then they lose their status. If they have agreements with the Income Tax Dept to only pay 5% tax then it’s shameful when we are being inflicted with 20 means 20. We are happy for the 1(1)Ks to be here as they provide an income for locals and are generally generous to our charities but they should have to pay their way like the rest of us.

4) If we had assisted childcare from birth to 3 years old (free for 3-4 years olds but means tested for the under 3s) many parents would go back to work as it would be worthwhile. They would be happy to have a better income and the Island would benefit from having to pay less income relief whilst having more people paying Social Security and Income Tax. Free childcare would pay for itself essentially. Through implementing this system, until recession hit France they had an 80% working rate amongst women of child bearing age – pretty impressive!

All of the above would find favour with the majority of local people.

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