ONCE more the States are considering whether the goods and services tax should apply to food.

That the issue is being raised again will serve to reinforce the widespread notion that too many politicians are too intent on resurrecting propositions that have already been comprehensively defeated — to the detriment of the smooth government and administration of the Island.
In this case, however, there are valid reasons for revisiting the issue.

To begin with, Deputy Carolyn Labey clearly has significant support in the newly constituted States for a reversal of policy. Secondly, it is undeniable that economic circumstances have changed dramatically since GST became a feature of Island life — as a result of which people who were once getting by may now be feeling the pinch quite severely.

Members will no doubt have to wrestle with arguments that are founded in emotion as well as fact, but in the end they will have to decide whether the social hardships which Deputy Labey believes to be a reality are outweighed by the fundamental reason why GST is at a flat rate of 3% — to maximise returns through minimising the cost of collection.

They will also have to decide whether the £6 million bill for the change can be contemplated in the present circumstances. In addition, Members will have to decide if the income support measures design-ed to compensate the less well-off for the impact of GST are actually delivering what they were meant to deliver. If it is determined that they are not, action is called for.

Meanwhile, although the House may well conclude that the new tax should continue to be levied across the board, the matter cannot be expected to lie down and die. Although GST is currently set at a low level guaranteed for three years, it will eventually become an obvious port of call whenever government is in need of more revenue.

It does not require crystal ball clairvoyance to appreciate that the rate of GST will go up in future, although to what level no one can yet say. Equally, it does not require great insight to see that the impact on low earners of taxation at, say, ten per cent would be far greater than at the present rate.
With all this in mind, it is evident that although the GST status quo might now be appropriate, other thinking will be necessary if — or more probably when — a rate increase is seen as economically and politically expedient.