Carl Walker, chair of the JCC, has also questioned the impact that applying the duty on all goods, regardless of price, could have on the cost of living for families who buy essential items online, and who are already struggling due to the pandemic.
This week the Treasury Department announced plans to review how GST is collected from online retailers, such as Amazon and eBay, with a view to placing a tax on all goods coming into the Island, no matter the value.
Currently the Island’s ‘de minimus’ limit means incoming items worth less than £135 are exempt from the levy. The government intends to explore removing this limit and whether online retailers can collect GST on items at ‘point-of sale’ – before they are dispatched to the Island.
Mr Walker said that he felt vendors may not wish to participate in such a programme, however, and could withdraw from the Jersey market altogether.
‘This has been tried before. When governments of small jurisdictions have tried to force online giants, or any online retailer, to apply specialist taxes there’s been incidences where these retailers have simply just switched off the jurisdiction and decided it’s too much trouble to change their computer systems and their website to have to start repaying the likes of the Jersey government GST every quarter or annually,’ he said.
‘We see there’s a real risk that could happen here because for these huge online giants Jersey must make a tiny fraction of 1% of their global market. Also, there’s going to be niche suppliers in the UK that might supply very specialist products, and it will just be too much effort to continue supplying Jersey as a small business. The consumer choice could be reduced dramatically.’
He added: ‘Another issue is that there are now many Islanders who use online pantry or supermarket services because they can’t afford to shop here, whether that’s for food, pet food or household supplies.
‘So they are going to see a 5% increase in their overall shopping bill and that’s going to hit families hard at a time when many are struggling because of reduced work due to Covid-19.’
Mr Walker said that a ‘potential positive’ of the development was that the government could, as part of its work, seek to dissuade offshore retailers from incorrectly charging VAT on goods and services to Islanders.
‘What we’re keen to put forward is if the government are going to approach the online giants and say, we want you to apply a local Jersey tax, we see no reason why they can’t, in that same conversation, make sure that you take off the VAT because it shouldn’t be applied to everybody,’ he said.
‘If they agree to that, it would mean that actually a lot of online shopping is going to get cheaper because VAT is going to come off and even with the GST back on, it’s still going to be less expensive.’
The Jersey Consumer Council is going to take part in the government review and is urging Islanders to get in contact with them on the matter via their website at consumercouncil.je.
