CALLS to remove GST on “essential food” have been reignited by the chief executive of the CI Coop – who has said the retailer is “ready to work with government if they choose to take this forward”.
Citing “the pressure of rising costs” on Islanders, Mark Cox contended that it “feels like the right moment for a new government to look seriously at how it can ease the burden on households” ahead of next month’s election.
But the Jersey Consumer Council has warned that initial price reductions achieved by taking GST off supermarket shopping “would be wiped out within a matter of weeks or months” and could lead to higher tax rates on “other essentials”.
Earlier this month, the British Retail Consortium told the JEP that food prices in the Island were around around 33% higher than they were in mid-2021 and could be “on course to breach the 40% mark” if UK grocery costs reach projected levels before the end of the year.
And Caritas Jersey recently expressed concern about increased poverty levels in the four years since the last election, with the charity stating that one food bank had seen its usage grow from 195 families to over 650 families over the period.
Mr Cox noted that “many households are feeling the pressure of rising costs”.
“We have been clear for some time that taking GST off essential food would be a straightforward way to help people with their weekly shop,” he continued.
“With food prices still under pressure from global inflation, this feels like the right moment for a new government to look seriously at how it can ease the burden on households.”
Mr Cox also highlighted that this was something the Coop would be able to “put in place very quickly”.
“Because our pricing is fully digital, we can update prices centrally across all our stores,” he explained.
“That means if GST were removed, we could pass that change through to customers overnight.”
Mr Cox argued that “at its heart, this is about doing the right thing for the community”.
“Food is not a luxury, it is a basic need, and any step that helps make it more affordable will have a real and immediate impact for Islanders,” he added.
“We would support moves in this direction and stand ready to work with government if they choose to take this forward.”
However, a Jersey Consumer Council spokesperson stated that the JCC’s view on removing GST off supermarket shopping “has always been one of caution”.
“The rate that groceries continue to rise, means that the initial 5% reduction would be wiped out within a matter of weeks or months, leaving the government with millions of pounds to find by presumably raising the GST on everything else,” they continued.
“Until we see a credible solution for how the shortfall in GST would be recovered by the government, the Council would be cautious, as the last thing we would want as a result would be a higher rate of GST on doctors bills, fuel and other essentials.”
A petition to remove GST on food last year garnered nearly 1,700 signatures.
However, ministers said that doing so could mean “raising the rate on other goods and services” in order to “balance the books” and “maintain public services”.
At the time, the government stated that: “Analysis undertaken by Treasury indicates that the GST rate on non-food goods and on services would need to be raised by roughly one percentage point (to 6%) to recover the revenue lost from removing GST on food.”
