Official bid to scrap GST from food

Tuesday 11 October 2022

A Reform Jersey Deputy is making a push to get GST scrapped from food by the start of 2024.

Deputy Raluca Kovacs argues that the "threat of the cost of living crisis is clear" and that removing the 5% tax added to food and drinks - excluding alcohol - would be an "appropriate" measure to the cost of living crisis.

In a report outlining her proposal, Deputy Kovacs noted that there were more than 20,000 price increases between April and September, while the prices of 1,400 products have gone up in the past week alone.

The average price rise, she said, was around 12%, but some have "increased by more than 30%, including bread, fresh chicken, pork, eggs, butter and dairy products."

Deputy Kovacs pointed out that research suggested that around half of islanders categorised themselves as "less than comfortable financially", but at the same time Government had further placed the tax burden onto individual islanders rather than businesses.

She said it was "striking" that income from GST will likely exceed forecasts due to inflation and argued that "this windfall should be used to benefit all of our community, regardless of their means and circumstances."

With this in mind, she estimated the "full-year effect of removing GST from food will be in the order of £10m", adding: "With 11%+ inflation predicted by the Bank of England and others in 2023, the actual amount raised in GST will still increase year-on-year, even if food is exempted."

She further argued that discussions with local retailers had shown that the GST changes could be made with simple tweaks to IT systems.

Asking for GST to be removed on food was a pledge in Reform Jersey's manifesto.

Speaking about her proposal, Deputy Kovacs commented: "...I have met with many people from across our community and I am more convinced than ever that this is the right thing to do and the right time to do it. Virtually without exception people have told me about some unprecedented increases in their everyday food costs, which are having a very real effect on their life choices for themselves and their families."

She continued: "I know that charities are helping more people with basic foodstuffs over longer periods and have concerns about the coming winters. So although removing GST will not solve this - every bit will help - as people are struggling with the very real and unprecedented levels of food price inflation.

"I know that the States of Jersey have discussed and debated removing GST on certain items before, with some very close voting, however, I believe the current economic and inflationary climate requires the removal of 5% now to assist many people in our community who are struggling to make ends meet."

Deputy Kovacs will be asking for States Members to agree to the principle that food should be zero-rated and task the Treasury Minister with bringing forward a plan to give effect go the decision "at the earliest opportunity, but no later than 1 January 2024."

The proposal is due to be debated on 22 November.