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Taking GST off food just increases the tax burden
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From Deputy Sarah Ferguson,
Chairman, States Public Accounts Committee.
I THINK perhaps your readers deserve an explanation as to why Deputy Le Fondré’s proposition is superior to that of the Deputy of Grouville.
We have mechanisms for supporting those under income support and non-taxpayers. There will be no new people being brought into income support, just an increase in the amounts paid to them.
A low, simple, widespread consumer tax has the following advantages:
It spreads the tax burden across the whole population, which is especially important in 20 years’ time when the age spread in the population will be biased towards the old. This will result in a lower tax burden on the young.
Otherwise, the tax for those in work will have to go up or we will need to increase the number of immigrants.
The broad-based tax will mitigate the need to go for substantial immigration in order to have enough people to support the old.
The section of the population suffering most is that which is subject to marginal relief. They never get the full benefit in a growing economy and always lose out in a contracting one. They are the ones with the two children and a mortgage – Middle Jersey.
If we change the marginal rate from 27% to 26%, this is a 3.8% change in the rate and will cost £2.2 million. It will go straight into their pockets and can be done quickly once it has come to the States. This is, I think, allowable under the FPP report, and if the Treasury Minister doesn’t bring it to the States in December, I will.
What this means is that, together with the other measures proposed in Projet 138, we will be benefiting the lower-income groups, focusing on some of the hardest-hit, at a significantly lower cost than the scattergun approach of removing GST on food. Much better value for money and much more efficient.
What is wrong with putting money directly back in people’s pockets for them to spend as they wish? Removing GST on food merely increases the complexity and, eventually, the total tax burden.
Soleil d’Hiver,
Mont Sohier,
St Brelade.
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