GST goes to 5% - including on bread, milk and vegetables (not to mention books and nappies)

The last State's sitting saw the latest debate on whether or not the island's government should apply the 5% goods and services tax to food, drink and domestic energy. Compelling arguments were given both ways, and even those who thought they knew firmly how they were going to vote were to be found wavering when emotive arguments about the immorality of taxing life's essentials were brought out on one hand, and equally compelling keep it simple arguments were brought out on the other.

For a moment, I found myself waivering too. Was it not true that little real benefit would be derived if this tax were removed from foodstuff and domestic energy? The States was already doing there bit for looking after the poor with the GST bonus, which goes to those who are not on benefits, but who also don't earn enough to pay tax. Meanwhile, tax thresholds had been adjusted to allow more disposable income for people, to allow for the increase in GST, and for those right at the bottom of the income ladder, Income Support had been adjusted to take note of the increase in GST.

This had to make more sense than having a system of exemptions, after all, the GST earned on these commodities was being redistributed to the 'poor and needy'. 

These arguments were not enough to convince 22 States Members, including myself - the only St Brelade representative to vote against putting GST on food and domestic fuel costs.

Rebranding GST

What clinched it for me was the fact that the whole 'redistribution' argument (as used here) is fundamentally flawed. There has been an attempt over recent years to rebrand GST from a 'nasty tax' that disproportionately affect those least able to pay (a 'regressive' tax) into what the Assistant Minister now calls a 'mildy progressive' tax. This is all the more remarkable considering that only a year ago, when taxation went out to 'consultation' (Jersey style), the Minister himself had labelled it 'slightly regressive.' It seems that the meaning of words can be fluid, to suit the circumstances.

So, returning to the the point, this form of redistribution is flawed, because it is not like the so-called Robin Hood tax, which targets capital and those most able to pay, rather, the GST form of re-distribution is very much from the middle/lower-middle to the 'poor'. Whilst it is true that GST does catch 'everybody', it is those with limited income - or low disposable incomes - that have to pay disproportionately. Whilst some protection is given to low earners in the form of increased support and tweaked tax thresholds, those who are above the poverty line, but still struggling in real terms, in an increasingly costly island, are the ones who really miss out. It is they who will be most affected, whilst the real wealth (the hoarded capital, the land banks of the developers, and the large property portfolios of wealthy rentiers) is not challenged.