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Ministers have agreed to freeze fuel tax and slash a proposed hike in alcohol duty next year ahead of a key spending debate – but furious hospitality leaders say the last-minute U-turn isn’t enough to rescue their ailing industry.
The Council of Ministers has offered to bring down its proposed rise in alcohol duty in the Government Plan by almost half – from 8.9% to 4.5%.
The change was proposed following strong criticism of its policymaking – and in particular the duty hike – from the Jersey Hospitality Association (JHA), who accused the Government of being "deaf" to businesses' needs.
In response, Ministers said that they recognised "the challenges being faced by the hospitality sector” and were seeking to achieve a “compromise” through a smaller rise that they said would decrease estimated revenue for 2024 import duties by £1,033,000.
Pictured: The Jersey Hospitality Association said that the hospitality industry is the "heartbeat" of Jersey, but described recent cost increases as "terrifying".
The Chief Minister said: “We are supporting amendments where possible. We are now putting forward a lower increase in alcohol duty, again supporting islanders and the economy.
“We are proposing a balanced and prudent Government Plan, which will assist islanders with the immediate challenges we are facing – especially housing and the cost of living – and invests more in the key public services that we all rely on.
“The Government Plan builds on our strong fiscal position, and uses the headroom made possible through years of prudence to keep more money in islanders’ pockets. It supports hard-working individuals and families, and invests in islanders’ priorities for now and the future.”
The Council of Minister's amendment also suggest that the Government "should publish a broader review of alcohol policy and consider what additional support could be provided for the hospitality sector and the island’s small spirits producers".
But, in a letter sent to States Members last night, on the eve of the debate over the Government Plan which sets spending for the next three years, the JHA made a strong argument against the move, and called for a freeze – something proposed by the Economic Affairs Scrutiny Panel.
In it, they said that it was "clear and proven that duty rate increases do not have an impact on controlling the volume of alcohol consumption in Jersey".
Ana and Marcus Calvani, Co-Chief Executive Officers of the JHA, instead called for a duty freeze – describing it as "a pause, giving us a chance to fix this by getting Health, Home Affairs, Economic Development, Treasury and Hospitality together".
Writing on behalf of the JHA board and members, the pair said that the hospitality industry is the "heartbeat" of Jersey, but described recent cost increases as "terrifying".
The Co-CEOs acknowledged the health concerns associated with the island's alcohol consumption, but said that alcohol duty increases have a "negative impact on mental health, lonely consumption, unregulated drinking, pre-loading, binge drinking and alcohol related domestic issues".
Pictured: Marcus and Ana Calvani, Co-Chief Executive Officers of the Jersey Hospitality Association. (Max Burnett)
They added: "All that raising duty does in Jersey, other than providing an easy tax to government, is drive people to buy in the discounted off-licence trade while penalising hospitality businesses (the on-trade) that serve alcohol in controlled, regulated, measured and safe environments.
"If the purpose of excise duties is to change behaviour among the general population, then it is clearly not working. All that is happening is that Jersey becomes a more expensive place to live and visit, and businesses go to the wall. Raising duty yet again in this government plan will just further these problems."
Criticism from industry leaders also led the Government to backtrack on its suggested increase in fuel duty in line with inflation (10.9%), which would have added 7p per litre of petrol, after last year's freeze. At the time, Ministers argued that this aligned with the island's carbon neutral objectives.
Last week, however, it said it would instead seek a freeze in order to support the hospitality sector, and the "economy more generally". This, it said, will lead to a revenue reduction of £2.7m.
Debate on the Government Plan gets underway today – you can find out more about its contents here. And follow the debate live by watching here.
Click to read the full letter to States Members from the Co-Chief Executive Officers of the Jersey Hospitality Association...
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