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Scrapping GST on food is seductive but wrong
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From Craig Leach.
CLEARLY Deputy Labey is to be congratulated for overcoming the advice of the Crown agents, the IMF and accepted international best practice in her efforts to get GST removed from food. She is also to be congratulated on her campaign, which benefited from two features in the JEP as well as an editorial.
What is surprising, given the topicality of GST exemptions in Jersey, has been the absence of coverage of the UK Mirrlees tax reform project for the 21st century. As recently as 30 July there was a press release of a submission that advocates the abolition in the UK of exemptions including food.
Just two quotes from the press release: ‘Applying zero or reduced rates of VAT to items on which poorer households spend a large proportion of their budgets was not a good way to help the less well off, as richer households gained more in cash terms from these tax breaks than poorer ones.’
‘It would therefore not be difficult to compensate most poor losers from the move to a uniform VAT – and the extra revenue raised could improve their living standards.’
In addition to helping the rich more than the poor, exemptions bring in their train a host of bureaucratic and legal issues and create work for lawyers, civil servants and retailers.
It is likely that no amount of informed rational analysis would counter the seductive popular vote-winning appeal of ‘let’s exempt food’ in an election year, but I believe your readers are entitled to know that the UK is being recommended to scrap exemptions and the reasons why.
Interested readers can look up www.ifs.org.uk/mirrleesreview
Les Fauvettes, La Grande Mielle, Grouville.
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