THE wisdom (or lack of it) of introducing a VAT system in this Island is only now becoming all too apparent.

Cast your mind back to the period before the goods and services tax debate and you will recall that the warnings were out there, but that they went (mainly) unheeded.

The Jersey Chamber of Commerce was undoubtedly the most strident voice, predicting that there would be increases in the suggested three per cent rate before long.

And how right they were.
Of course there is, thankfully, a three-year undertaking not to increase GST, but in 2012, once that ultimatum has been exceeded, the Comptroller and Auditor General has estimated the need for a ginormous leap from three per cent up to 12 per cent.

At the time GST was agreed by our beloved States Members it was, of course, Chief Minister Terry Le Sueur who was sitting in the Treasury hot seat. I vaguely recall some woolly reassurances that there would be little need to raise the rate of GST beyond, say, seven per cent because Jersey was in such good shape, economically speaking, and could in any case rely on its finance industry to rescue it.

Well, times have changed, have they not? An unprecedented £50 million black hole looms imminently, even with all the measures that the Treasury Minister put in place way back then to fill the deficit left by the zero corporate tax regime. Which, unless I’m very much mistaken, lacks the approval of the European Union authorities it was intended to appease. How short-sighted and arrogant could our senior politicians have been not to see that there were gaping holes in their evidence bucket?

So what damage might this 12 per cent rate cause us humble citizens? Well, one good thing is that it will have marginal disadvantages for retailers, in that they already have their computer and tax systems in place. Ditto importers, tax advisers and so forth.

But it will, of course, make quite a hole in the pockets of purchasers. A 12p tax on every pound is quite different from a 3p tax on every pound.

A £50 purchase will cost me an extra £6. A supermarket shop totalling, at current rates, £100 will require an extra £12 at the till. Whoopee.

I would love to know what the UK retailers who already charge UK VAT at 17.5% will be doing. Presumably they will charge UK VAT plus the extra Jersey GST at 12% on top. Quite a coup, Mr Chief Minister. Congratulations.