Government rejects calls to scrap GST on green goods

Tuesday 23 March 2021

The Government has rejected proposals to scrap GST on ‘green’ products, describing them as ineffective.

In December, Treasury Minister Susie Pinel was tasked with analysing the effect of scrapping GST on a number of environmentally friendly goods, after States Members supported an amendment to the Government Plan proposed by Deputy Rob Ward.

She has now returned with her findings, which conclude that zero-rating the list proposed by Deputy Ward and other States Members – including solar panels, electric cars and loft insulation – wouldn’t be an effective way to encourage more environmentally friendly practices.

She said: “[I] remain convinced that reductions in GST are not effective in encouraging the take-up of environmentally-friendly products due to Jersey’s low - 5% - rate of GST. 

“The incentive created by zero-rating would be too little to affect the purchasing decisions of lower-income households and a needless bonus for higher- income households which are more likely in any event to invest in such goods.

“Were the Government to incentivise take-up of such products, I may be more inclined to support any investigation of schemes which subsidised the use of environmentally-friendly goods by lower-income households while maintaining the GST rate on such goods.”

In order to reach her conclusion, the Deputy Pinel asked her officers to come up with the total amount of green products sold in Jersey and how much GST it would attract.

Pictured: £2.4m-worth of electric vehicles were sold in Jersey in 2019.

Based on 2019 data, it is estimated that around £360,000-worth of solar panels were supplied in Jersey that year, £2.4m-worth of electric vehicles, £6.2m-worth of loft / cavity insulation and double glazing, and £1.9m-worth of ground-source and air-source heat pumps. 

Together, that would have raised £577,000 of GST. 

Responding to the Treasury Ministers conclusions, Deputy Ward said: “Yet again, the Government find ways not to address areas that may, even in a small way, change behaviours towards climate positive initiatives. 

“The figures quoted for costs in these areas are small compared to the amounts being spent in the overall Government Plan. 

“The argument that lower income households would not be helped misses the point and is ironic given the failure of this Government to reduce income inequality in any meaningful way. 

“It demonstrates the lack of real action on any area that addresses climate change and the cynical mixing of reasoning to block action.

“This week, I am attending a Commonwealth Parliamentary Forum on climate change. One key speaker highlighted the need to be bold - it seems Jersey is not and will not be with its current Government.”