GST ‘blip’ causes big rise in inflation
Friday 22nd July 2011, 2:59PM BST.
Treasury Minister Philip Ozouf
THE cost of living in Jersey increased sharply last month following the rise in GST.
According to figures released today, inflation increased by 4.5 per cent during the year leading up to last month.
According to figures released today, inflation increased by 4.5 per cent during the year leading up to last month.
And 1.3 per cent of that rise occurred last month alone, after GST increased from three per cent to five per cent.
However, Treasury Minister Philip Ozouf has moved to reassure Islanders that the rise was expected, and that the increase was just a ‘temporary blip’ caused by the one-off rise in the sales tax.
He added: ‘We have always said that the effect of the GST rise would filter through into this quarter’s figures.
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Hmm, kind of undermines this story then: http://www.thisisjersey.com/2011/01/24/jerseys-inflation-is-half-the-uk-rate/
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what a surprise–not!
The working class are the ones who suffer the consequences the most, plus the pensioners.
With no pay rises on the horizon (except for a select few) the divide between rich and poor will get worse and the very folk who need help will suffer the most.
Time to sort this unfairness out now.
Politicians should do something now before the rot sets in and give us something for the money they are paid.
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Shame my pay hasn’t risen in 5 years and the last bonus i recieved was £125!..
Thanks to the IOD and COM asking employers not to raise salaries while our leaders merrily increase costs for everyone.
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Oh well that will boost rents for the landlords of jersey.
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“A temporary blip” says he!
I wonder what reassurance the minister is planning to offer to all those who are now 4.5% worse off per year and what he plans to do to address the respective shortfall in personal salaries when bosses can’t provide cost of living increases that come close.
For the majority of hard working islanders, this will run to 4 figures a year of lost disposable income and we may just, JUST have recovered the lost cash when we get smacked with the Social Security increase in 2013 …
Considering this comes off the back of the spending review and during an alleged period of governmental austerity, it seems to be the person on the street who is being tasked (or is that taxed) with making up for the State’s apparent lack of ability to manage a simple budget.
Roll on the election I say!
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Until the next rise in GST!!
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Isn’t it really reassuring to know that all the extra taxes and increased prices we are paying, leading to this increase in the cost of living, was expected and is just a temporary blip. Only an idiot would be surprised to learn that the States’ continuing policies of spend, spend, spend have led to an ever-increasing burden on islanders (not the likes of Mr Ogley, of course, with his massive handout – for what??? – all at our expense). And in my book a temporary blip is when the effect will be reversed. This is not the case here – we will always be paying the additional GST. The fact that next year the impact on the year-on-year cost of living will be historical does not affect the fact that the impact on our cost of living will continue. And I should be reassured, Senator Ozouf? Pull the other one.
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Just waiting for Nick Corbel to demand 4.5% pay increases for all TGWU and Unite members now.
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If Senator Ozouf has a spare half hour would he be kind enough to tell my staff why their wages have gone down 4.5% ( but foof costs have soared ) and because of the recession steep rises in ( Government ) utilities there is no money in the kitty to give them a rise as the business costs more to run.
Maybe he could find them all jobs working for the States then I could go on permanent gardening leave.
Davey West.
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One off rise in GST until the next one.
Whar will be the excuse next month?
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Of course it’a ‘blip’ in the short term. After that it becomes a plateau of sorts but without a drop down on the other side.
I’m looking for the right word. Rise, perhaps?
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Am I going to get a 5% payrise this year? Nope.
Have I had a payrise to match inflation in the last few years? Nope.
Have I had a payrise at all in last few years? Nope.
Will Ouzaf give a monkey? Nope.
Will I ever vote for him or other of his ilk? Nope.
Will Ouzaf ever feel the effects of his ‘ policies ‘ ? Nope.
Roll on the elections. Not that he will be up for a vote.
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I like the wording “Senator Ozouf has moved to reassure the public”.
I don’t see how the word “Ozouf” can ever meaningfully appear in the same sentence as the word “reassure”. I wonder if a career on the comedy circuit might beckon.
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@2 bella
“Time to sort this unfairness out now.”
Go bella go! Time to take from the rich, (whatever they have) and and give it to the poor!
Please just don’t forget to visit Russia to carefully look at results of 70 year long experiment like this.
@7 Sam De St. Pierre
Inflation is measured between two points in time. It shows price change over the period, not price level. GST increase is a single point event and falling between Dec 2010 and Dec 2011 causes increase in prices (and hence in inflation) in this period only, but not in the next one.
So Mr Ozouf is perfectly right – GST increase is only a BLIP in INFLATION. Which can be translated – due to GST increase prices in this year/period rise faster, but in the future the price rise will slow down.
Which doesn’t mean of course that prices will go down
For example:
Price of good X in Jan 2010: 100.
Inflation in 2010 is at, say, 5% (3%+2%GST increase), so price in Jan 2011 is 100*1.05=105.
This becomes base to comparison with year 2012. Hence:
Price of good X in Jan 2011: 105.
Inflation in 2011 is at, say, 3% so price in Jan 2012 is 105*1.03 = 108.15
And so on, and so on.
In the example: change in price between 2010 and 2011 (inflation in 2011) is 5%, and change in price between 2011 and 2012 (inflation in 2012) is 3%. Inflation dropped (there was a ‘a blip’ in 2011), prices not.
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Treasury Minister Philip Ozouf
Are you up for reelection this year???
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I fully expect that it is only a matter of time before GST is equal to VAT!
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it may be more than 4.5% depending on how you look at it , unless you are well heeled , i would guess we are all looking for savings .
which could be .
not going for that meal or getting those new clothes, a new bathroom , general consumer goods .
who suffers , the worker who serve’s you they will have no job due to falling sales .
the self employed, plumber ( and other trades ) who would of fitted your bath room.
and a small global ripple effect for the loss of sale of general consumer goods .
i hope the euro will be on stable ground soon
the fall out, from it not being, does not bear thinking about (i am not a finance person) i.m.h.o.
rose tinted specks anyone .
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Is Ozouf a “blip” that will be removed soon!
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There is only one blip here Government spending recklessly no more no less…all the rest is smoke and mirrors…just shows the depth of contempt the politicians have for the ordinary man
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Gino Risoli
Posted July 22, 2011 at 4:13 pm
Oh well that will boost rents for the landlords of jersey.
The reality is Gino, as landlord in my rented non quallies accomodation, I have two people who are local. I have asked them both why they are not renting flats in the A-H sector and they tell me with rates, water, heating costs it is cheaper for them to live in smaller but overall cheaper lodgings.
This was never the case up until two years ago.Let us also get the facts straight, that as Government driven increases go through the system the tradesmen put up their prices.
Having any repair work done on a property is very expensive in Jersey.
Tim South.
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I think our dear treasury ministers handling of the economy can be likened to a man walking us over the cliff without parachutes there will be no soft landing for us the tax payers.He is extremely misguided in his economic approach due to a total lack of experience in such matters.
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Hi C Le Verdic @11,
You are such a stickler for the accurate use of language – Stoop it before you ruin yet another fairy story.
A “blip” or a “rise” eroneously* used could lead to me utilising inappropriate imagery.
* not a typo or a braino this time
I am here to learn as well as share, so Thanks CleV,
HIDS x.
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Slawek (14) Inflation in 2010 is at, say, 5% (3%+2%GST increase), so price in Jan 2011 is 100*1.05=105.
Does a 2% rise in GST equal 2%? Sorry but ‘No’. The 2% applies to not only the first transaction but also each subsequent iteration. Hence after ten iterations the 2% rise now 2.3% or 3% after 22 iterations.
GST contributes to it’s own inflation!
However you are correct it is a BLIP and by next year we will have forgotten we ever had the cash in the first place.
Thank you Slawek, all good reasons for increasing taxation and Social Security on the better off as they will never miss it. Just remember this is Jersey and not the Soviet Union and this is Philip Ozouf and not Joseph Stalin.
Here in Jersey we tax the poor and give handouts to the rich.
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A GST Blip? Err sorry but if somthing is recorded as up 4.5% thats it, its 4.5% more expensive to live here from then on. Who are they kidding with this ‘blip’ rubbish, are they trying to say we will have 4.5% de-flation soon afterwards for a balance?
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hands up how many think hyper inflation is round the corner?
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Tim , you think it fair that while most absorb inflation landlords are contracted a pay increase.?
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The only reassurance I will get is when this person is removed from office. I shudder to think what things will be like in 3 years time.
GST affects prices in an inflationary manner and it doesn’t just affect the figures in the year the rise occurs. It compounds inflation year on year. Anyone with an understanding of economics would know this!
And another thing GST in shops is more than 5% as it isn’t applied at the till. Who was it that made this decision?
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no15,we are only allowed to use a pencil and not a pen while voting so….. the people we do not want back in will probably be back in. Sad sad sad but sadly thats the name of the game in jersey
probably wont show my comment either.
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Adrian, you and the small vocal minority want him removed. Even to get a petition to remove him had to be masqueraded as something else to get people to sign it. Sure the moaners will come on here and claim the same thing as you, but you are the same type of people, under-achievers who expect the government to give, give, give because you have decided not to challenge yourselves.
Ozouf isn’t going anywhere fast, and with the support of the sensible silent majority, I can assure you, Ozouf will become one of the longest serving, if not longest serving States Member, and hopefully Chief Minister in due course.
A blip in inflation caused by GST is obvious, but the key point of the word is ‘blip’. Again, if you are not happy about your status in society, then do something about it, the majority of are happy, and don’t find us moaning on here like whinging Poms, but rather confident that we are living in one of the most economically stable places in the world, and will continue to do so. We are not reliant on purely USA, Europe, South Pacific or British business, but have a good equilibrium across the board.
If you are bothered then you have two choices, do something about it (which of course you won’t, because lack of initiative is why you are where you are), or you could leave.
Do everyone a favour, and buy a one-way ticket, but then again – I would miss you, I do like the Schadenfruede of watching you lot whinge and moan….
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Hyper Inflation has already been here…
It happened in 2006 when house prices went up 50% in 18 months.
What we have now is a banking sector desperate not to be forced to realise the losses which have accrued on the repossessed houses. They even changed the accountancy rules so that banks can hide their losses in their balance sheets by recognising house values as not having decreased.
To that end the US has printed another $1 trillion which has forced up the price of gold by 100% in those three years.
Thus valued in the real universal currency (i.e. gold) house prices have fallen by 40% in Jersey since 2008, they have gone down from 650 troy ounces of gold to 400 troy ounces of gold for an average family home.
Average wages have fallen from 75 ounces of gold to 45 ounces of gold.
Jersey has no gold reserves so has been hit worse than most countries – China, India, Vietnam, Mexico, Brazil, Russia who have all been buying up gold to sustain their wealth.
Mismanagement by the Treasury Minister as I believe was the subject of a recent letter to the JEP.
If they can’t even do what they claim to be good at very well, then how can you expect them to be good at doing things they aren’t interested in.
At least we are wiping out the value of civil service pensions
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Adrian 27,
Senator Ozouf made that diabolical decision, who else?
Speaking on the now defunct “Talkback” Radio Jersey show the reason he gave for doing so was as follows…..,
“I have decided to apply the GST on the “shelf” rather than at the “till” because if a visitor walked in a shop and selected an item from the “shelf” priced at E.G. £1 and was then told by the person operating the “till” that the price was actally £1.03p, that would not be right” said him.
As you and I know, that was the cause of the ridiculous “mark ups” in this Island, and it has cost every resident in this Island several hundred pounds more every year.
I cannot personally think of many worse decisions made by a Politician that that one.
Bear in mind that the Goods Tax in the USA has been added at the till for many many years, and works successfully for 300,million people, but not good enough for Senator Ozouf!
IMHO, we will be in serious trouble when that man becomes CM
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Wow !
Real Truthseeker @27
You have finally invested in a ‘speelchecker’ – Thanks. Deciphering your posts is now much easier but just as amusing.
Even with your new found ‘tool’ you will still find that stringing words together in a meaningful way still requires the use of a brain.
Perhaps you are getting there with Adrian’s help as you say:
“Ozouf isn’t going anywhere fast”
Perhaps we can build on your observation of his performance and this developing consensus ?
HIDS x.
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29.Real Truthseeker.
I suggest you keep seeking because you haven’t found the real truth yet.
Amongst my friends and associates, Ozouf is not highly thought of at all and it would not surprise us if he comes under pressure the next time he has to face the electorate.
Before you come back accusing me of being inferior intellect, my companions and family consist of graduates, a chemist, business people, a genetic scientist, a surgeon, a doctor and teachers as well as some who can do the Times crossword every day.
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Mona and the scary thing is that clowns still vote for these sorts, don’t they RT.
RT at this rate of deterioration all but the select few will end up as so called under achievers due to poor fiscal polices being followed by your hero.
You will then be able to go back to NZ and get a job as a farm hand.
When things collapse the only option will be relocation for many.
GST at 20% isn’t that far away.
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And, as always; Adrian, Nigel, Mona (how appropriate) whine and whinge but don’t suggest any alternatives to the very sensible policies of Ozouf, Le Sueur and their predecessors who have put us in a much better situation than most jurisdictions are facing. Perhaps Nigel and his oh so intellectual friends could enlighten us with their alternative politicians or policies. At least Mona acknowledges that Ozouf will be CM. Splendid!
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Euan Mee @35
“suggest any alternatives” ?
How rude ! – did you forget “James” @30, who made some observations about Gold ?
(OK we do not have to pay for everything in gold [yet])
And before you say ‘hindsight’ – what would be the classic financial refuge during times of uncertainty ?
Should gold have formed a significant part of the (life) ‘raft’ of investment ?
A bit of a no-brainer ?
Better to be “oh so intellectual” rather than “oh so UN-intellectual”
don’t you fink ?
HIDS x.
P.S. Also, did we invest our economic stimulus fund in UK subcontractors ?
Splendid!
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#35 Euan Mee – ‘Ozouf, Le Sueur and their predecessors who have put us in a much better situation than most jurisdictions are facing’
Are you talking about Zero/Ten, or the decision to reduce the amount of tax payable by the very rich in Jersey? Be assured that international community does not view these parasitic strategies with the same rose coloured specs as you. Neither would any economist with a modicum of intelligence.
Someone please remind Ozouf that those A-Z books on economics he borrowed from the library in the 80′s were due back a long time ago.
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Anyone else agree that GST doesn’t just cause inflation in the year it is raised? It is also responsible for a percentage of each subsequent year’s inflation figures. Happy with that everyone?
Euan Mee/RT I have suggested alternatives on numeorus occassions. However this doesn’t fit in with the CoM’s vision of a future Jersey.
Precious metals are indeed one place to be at present however for maximum speedy returns this position should have been taken around 2005/6 when gold was @$300/ounce. You would have five folded your money in only 5 years. Not bad eh!
Even property hasn’t managed these sort of returns. Meanwhile in bank land you may have got @20% on your capital minus the taxman’s cut. Gold and property gains being tax free in Jersey.
Obviously gold and property can go down as well as up. But should there be a total collapse of the world economy your money would be of no use and you savings would be gone unlike gold, property and land which would still be of value.
The rise in precious metals will continue as the Far East becomes more consumerised, and this is without factoring in things like subprime and other things that haven’t become too apparent yet.
HIDS life raft is rather apt or these times.
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Adrian (27) exclaims that a GST rise doesn’t only impact upon inflation in the year of the rise but “compounds inflation year on year”. He then says that anyone with a basic understanding of economics knows this.
Where does one start with Adrian. I am minded to set out a very, very simple example to show that what Adrian says is wrong. Should I bother?
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The only blip in Jersey Oz is you. If you feel you have the support of the people stand down now and seek re-election, your record, your lack of respect for middle Jersey, your incompetence knows no bounds. Le Mr Le Marquand, Les Gresley, Breckon and others not driven by greed and ideology take thier place. You Sir are a disgrace to our Island. Step aside now for all our sakes.
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Senator Ozouf only needs one argument to win the post of Chief Minister.
“Who has the confidence of the finance industry?”
The simple answer is Phillip Ozouf who has been elctionering openly for the post on this platform for at least a year.
Candidates in October will wriggle like mad as they know Philip Ozouf is not that popular but come the vote in the States they will do the ‘right’ thing
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Slawek #14 I did go to school and soI do understand how the cost of living index operates. My point is that senator Ozouf is being disingenuous by his “temporary blip” comment. If the col increases by 5% and then by 3% in the next year I know that I will be paying 8.15% more compared with two years earlier. The point is that the compounding impact over time is far greater then the simple arithmetic. And, therefore, it is not a temporary blip – the true cost remains with us for ever.
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Hi “Anon” @40
I largely agree with what you say.
Only thing is you mention Le Marquand, who has just announced his delusions of becoming CM:
At last Jersey can have a leader who’s integrity is only surpassed by his good judgement
http://www.thisisjersey.com/2010/03/31/ill-resign-over-police-chief-appointment/
or maybe not ?
HIDS x.
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Pip Clement (41)
How depressing you are. Come the October election I will put my tick against any name who openly supports Ian Le Marquand for Chief Minister. Hope you will support me in this.
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sam de St Pierre (42) I did go to school and soI do understand how the cost of living index operates.
Sam you are right in saying that senator Ozouf is being disingenuous with regard to GST and its impact on inflation. Slawek #14 is wide of the make.
However I must admit an error in my post at (23), the impact of GST is worse than I calculated.
GST is not a value added tax and hence the effect is cumulative. For businesses trading within Jersey a sales tax of 21% will be achieved after just four trading iterations. At this rate the voters of Jersey would be better of with George Osborne rather than Philip Ozouf. ☺
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@45 Mark
“GST is not a value added tax and hence the effect is cumulative. For businesses trading within Jersey a sales tax of 21% will be achieved after just four trading iterations.”
I am extremely interested to see some number example how you arrived at 21% after 4 iterations..
If I may suggest do your homework and read this before posting another nonsense like post 45:
http://www.gov.je/TaxesMoney/GST/Archive/Pages/GSTQuestionsForBusiness.aspx
I recommend you reading section “How does GST work?” at least three times.
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“How depressing you are. Come the October election I will put my tick against any name who openly supports Ian Le Marquand for Chief Minister. Hope you will support me in this.”
I wil not vote for any supporters of Phillip Ozouf but having seen the dispicable weaseling and vote catching that characterises Jersey elections I am not holding my breath.
The secret ballot for Chief Minister is a gift to the dishonest politician. My Constable and Deputy avoid discussing politics as much as possible, if they have a view on GST they keep it to themselves and they do not support the CoM but they vote for them 99% of the time.
Funny place Jersey!
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I am quite in favour of GST I would happily see it raised to 10% as long as it was accompanied by a £10,000 increase in the income tax threshold or to 20% if they increased the threshold by £30,000.
Where they have gone wrong is by raising GST without raising the income tax threshold.
Inflation is only a problem if spending power does not increase to match it.
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Its good to see that others realise GST compounds inflation year on year unlike the likes of Mike and Ozouf.
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A ‘Blip’ so sorry you see it like that. To others it is the difference between heat and eat, but you would not understand that, being born with a silver spoon in your mouth. States members you have nothing to fear from standing up to this extreme oligarch. He will be voted out by the Public when the time comes. It may be three years away. But members who support him now risk thier own seats. Time to go back to your fantasy economics OZ.
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@#13 “I like the wording “Senator Ozouf has moved to reassure the public”.”
I would prefer to read…. “Senator Ozouf has been removed to reassure the public”.
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