ONE of the Island’s leading retailers has backed an attempt to remove GST from food.

Reform Jersey’s Deputy Raluca Kovacs this week lodged a proposition to scrap the 5% sales tax on food with the aim of helping Islanders struggling in the cost-of-living crisis.

The politician, whose proposal is due to be debated on 22 November, said she was ‘more convinced than ever that this is the right thing to do’. If approved, the changes would come into effect by January 2024.

Discussions had taken place with several of the Island’s leading retailers, Deputy Kovacs wrote in her proposition, with indications that changes to IT systems could be applied ‘and run across numerous stores’.

The Channel Islands Co-operative Society chief executive Mark Cox said the retailer had ‘always believed that the government should not tax basic food items’.

‘GST is a consumption tax that hits those who are less affluent more than others in the community as they spend a larger proportion of their income on food,’ he said.

Mr Cox added: ‘Removing GST from basic foods at a time of rising food prices would be welcomed and we would commit to ensuring the reduction was passed on to consumers.’

Deputy Kovacs said: ‘I know that charities are helping more people with basic foodstuffs over longer periods and have concerns about the coming winters. 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.’

The proposal fulfilled an election pledge made in Reform Jersey’s manifesto, Deputy Kovacs said.

She added: ‘While I have been working on the background details contained in my report, I have met 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.’

Deputy Kovacs said she believed ‘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’.

In the report accompanying her proposition, she highlighted food prices and a ‘constant upwards price pressure’ on everyday food items sold in the Island.

However, one charity has said that while it appreciated the bid to help people in financial difficulty, it believed the change would ‘disproportionately’ benefit higher earners.

Salvation Army officer Richard Nunn called the proposition a ‘blanket approach’.

‘While it will help those that are the poorest, it could be better targeted because it will disproportionately affect the wealthy,’ he said.

Mr Nunn recently described a ‘perfect storm’ over the cost-of-living crisis, as charities saw demand for their services double, while marginalised Islanders were pushed to the brink ahead of a tough winter.

Speaking in August, he said: ‘It’s a perfect storm. The demand has doubled already since last year and we are only half way through the year. My big fear is what happens in October, November and December when the costs suddenly go up again.’

Deputy Kovacs said it was ‘simply not the case’ that it would be too complicated or difficult to implement the reduction in GST.

Her report stated: ‘I have spoken with several of the Island’s leading retailers and am told that excluding items from GST is a basic IT system change where alterations to the IT system can be actioned across numerous stores. Similar responses concerning the relative ease with which this could be actioned have been received from speaking with a few small shops/retailers.’

Deputy Kovacs also cited the States recent approval of a proposition to remove GST from period products.

Highlighting the £106 million the government made from GST in 2021, Deputy Kovacs argued: My contention is that the windfall being enjoyed by the Treasury should be reduced to benefit all of our community, regardless of their means and circumstances.’

She cited a rough estimate that zero-rating all food would cost more than £10 million, a figure which was provided to candidates during this summer’s election.

Deputy Kovacs added: ‘If adopted, my proposals would not have a full-year effect in 2023 depending on when they were introduced. The first-year effect would lead to an estimated loss of revenue of around £5 to £6 million.’

GST was first introduced in 2008 at a rate of 3% before going up to 5% in 2011, the level at which it has remained.