The Issues

GST at 3% on luxury items will provide useful revenue for the overall benefit of the community. The main question is whether exemptions should be applied. This is not as straight-forward as it appears. Most people think of food purchased in a supermarket or similar when arguing for exemptions and believe that meals in restaurants should not be exempt. However where do you draw the line?

If you buy a burger, a pack of pre-packed sandwiches, and a chocolate bar from a beach concession is GST chargeable on all of the items? What is the difference between buying sandwiches from a beach concession counter and Marks & Spencer? Some countries have exemptions for specific basic foodstuffs such as milk, eggs, butter etc. This avenue may provide a solution.

GST is an unfortunate but unavoidable tax and I have not seen any better alternative to make up a significant part of the £80-100m black hole.

I believe that at the very least medicines and medical services should be exempted from GST. We need to consider carefully the cost and practicality of exempting children's clothes and essential foods and if at all possible these should also be exempt.

The low income support measures must be properly monitored to ensure that those on lower incomes are protected.

We are very much against GST and we vow to rescind it. Not only that, because it is a regressive tax it will affect the poorest twice as hard as the wealthiest in the island.

It will put up the cost of living, it will hit business, especially tourism on the island and therefore we will rescind it and replace it with a much fairer taxes.

I could go on to talk about 20 means 20 which is a nightmare and will affect middle earners far worse than the high earners.

Middle earners especially with two incomes coming into the family, should be ware of 20 means 20 as it will raise their tax bill by up to 25% and that is a real shock.

Policies are a diversion

Have you noticed in life that sometimes events repeat themselves?

The reason for this is that we did not learn from the experience.

Just like our elections we do the same thing over again but we expect a different result.

It’s not possible!

I am against increased taxation like any other ordinary resident.

Unfortunately, we have to raise taxes to provide the vast raft of public services that many of us utilise and, in addition, if Jersey wishes to retain the benefits of the financial services industry the Island cannot expect the same revenues as before, due to global competition.

This means that the Island can expect a reduction in annual income of around £80M in a few years time and more tax income is the only way to bridge the gap, without massive cuts in public services linked to widespread redundancies.

General Sales Tax is the most painless option of all the choices available. It will cover all classes of local resident as well as visitors, providing the largest pool of wealth to collect tax from, which is why it can be pegged at 3 percent for, at least, the first few years of operation. At that rate, there is a reasonable expectation that many retailers can absorb the increase from within their profit margins.

Income tax applies to a smaller group of people and obviously would not apply to holidaymakers making purchases. To raise the same amount of revenue as GST, Jersey would have to give up its flat tax rate of 20 percent, either increasing the flat rate or by introducing graduated rates of tax. This would immediately impact on mainly wealthy residents, attracted to the Island by the low income tax rate.

This group tend to be the most mobile, often owning properties in more than one country. They would simply go and live somewhere else, depriving Jersey of their tax revenue entirely.

Ultimately this would impact upon the high earners in our financial services industry who might easily consider relocating to other global finance centres, some of which levy no income tax at all.

Thus, at a time when even the UK and the USA are considering the merits of low rate flat taxes, to go against the flow would be very dangerous for the Island's economy. In reality, Jersey should be expecting to reduce its income tax rate.

Lifting the cap on Social Insurance payments comes into the category of a payroll tax. This measure would change the nature of the current Social Insurance scheme and would cast the tax net over a limited group of people, essentially those in regular employment.

It would be easy to collect, as a system is already in place and it does allow opportunities to adjust the rate levels and caps for both employer and employee.

However, despite the apparent attractions, payroll taxes in general can be extremely damaging, especially for a small economy like Jersey. The extra costs to the employer can put off businesses from relocating to the Island and encourage locally based businesses to consider leaving.

The extra levy on the employees wage packet fuels wage demands and also puts pressure, on high earners especially, to consider working in lower taxation locations. The dangers are that the local economy shrinks, rather than expands, alongside an inflationary wage spiral.

There are numerous other taxes to consider, such as Capital Gains Tax, Environmental Taxes, Inheritance Tax, Land Tax etc. but none are capable of raising anything like the amounts needed to cover a budget deficit of £80M.
Thus GST is Jersey's cod liver oil. No one wants to swallow it, but things could get a lot worse without it.

In an effort to safeguard our economy against competitive international pressure, the States have agreed to change the way it taxes companies and individuals. I broadly support the moves towards the 0-10 tax package and the 20% means 20% proposal; however I am deeply concerned about the implications of GST on those in our community on lower incomes.

I will support the proposal to exempt basic foodstuffs, medicines and children’s clothing from GST; if I can be satisfied the administrative costs and implications of such a move are not prohibitive.

Since we have to find extra income from somewhere, I'm in favour of GST as the tax which will raise the largest amount of money with the least disruption and bureaucracy. The unpalatable truth is that taxation has not matched expenditure for some time. After several years of financial restraint, there are no obvious areas for large savings to be made in the public sector - so, either taxes must be raised, or services must be cut. Not popular, but true.

This is a response from the Centre Party:

We are opposed to the introduction of GST. We have a range of alternate measures which have countered the need for GST. We are particularly opposed to taxes which do not take account of the ability to pay.

Jersey businesses will suffer a loss of turnover as their customers will have less money to spend in their shops or will choose to source their goods through the internet or on holidays overseas, additionally Jersey businesses will have some associated costs in administering the tax on top of the increased of administering ISIT and benefits in kind and the existing social security.

Jersey businesses are already set to be heavily hit under the zero-ten income tax policy and with the duplication of existing businesses being built on the Waterfront.

More than this we do not believe that setting GST at 3% is feasible, the costs of collection, administration and perhaps an increased number of customs officers to prevent people importing too many goods from France will likely mean that the rate will have to rise.

The UK government has publicly stated that VAT is economically unfeasible at less that 17.5%. Rises in the Jersey rate have already been mooted and have not been ruled out, which is worrying when one considers that the tax has not yet been implemented.

This is a response from the Centre Party:

We are opposed to the introduction of GST. We have a range of alternate measures which have countered the need for GST. We are particularly opposed to taxes which do not take account of the ability to pay.

Jersey businesses will suffer a loss of turnover as their customers will have less money to spend in their shops or will choose to source their goods through the internet or on holidays overseas, additionally Jersey businesses will have some associated costs in administering the tax on top of the increased of administering ISIT and benefits in kind and the existing social security.

Jersey businesses are already set to be heavily hit under the zero-ten income tax policy and with the duplication of existing businesses being built on the Waterfront.

More than this we do not believe that setting GST at 3% is feasible, the costs of collection, administration and perhaps an increased number of customs officers to prevent people importing too many goods from France will likely mean that the rate will have to rise.

The UK government has publicly stated that VAT is economically unfeasible at less that 17.5%. Rises in the Jersey rate have already been mooted and have not been ruled out, which is worrying when one considers that the tax has not yet been implemented.

I am for the introduction of GST, at a low rate without exemptions as I believe that the introduction of this tax will help to protect the Island's economy from predatory tax competition from other offshore jurisdictions providing financial services in addition to helping to fill the "black hole" caused by introduction of the zero-ten tax package.

I do not support the introduction of a GST tax.

For any government to run its country it must collect taxes to run its infrastructure. Schools, Hospitals, Police, Doctors, Nurses, they all have to be paid for out of taxes. So the need to collect taxes is very real. It must however be targeted at the right sections of our community and economy.

Why do we need increased taxes? The States have decided to reduce our corporate rate of tax (0/10) so the shortfall needs to be made up by increased taxes. We the public now have to pay the projected shortfall of £80million-£100million.

Without doubt, the biggest single thing to affect people in the next 3 years will be the inevitable tax increases. Middle income earners will be hit the hardest. There are plenty of alternative tax options that are available to the States to adopt as part of their fiscal strategy. I would seek the implementation of alternative tax measures that did not impact on the lower paid sections of our community.

Government should protect the disadvantaged and less well off sections of our community, whilst encouraging those on high salaries to contribute more. This could be done in numerous ways, a windfall tax, increasing the rate of income tax on a sliding scale for high earners, a monopolies tax. These are all possible alternatives to what is already being proposed. If elected I will support alternative tax measures.

Middle income earners will be the hardest hit, with the freezing of exemption limits this will effectively bring more people within the tax limits.

It is only right and fair that members of our society pay a fair share towards the society they live in. I support the introduction of a PAYE (IT IS) tax collection. This is due to start in January 2006.

I am against any unnecessary increases in tax.

I do not support the introduction of a GST tax. This tax will hit all sectors of our economy and will be extremely regressive, this tax will destroy what’s left of our tourism industry.

I think the introduction of an inheritance tax is appalling. I will not support this tax if elected.

It has amazed me that hardly any of the alternative tax measures put forward by varies States members have been looked at as a viable alternative to what has already been proposed. If you elect me to the States, I would work with various States members to reduce unnecessary expenditure and reduce the need for more tax increases.

Jersey has always been recognised as a low tax jurisdiction, I would wish to keep it that way.

Unlike some candidates I do not oppose sales taxes as a matter of principal. Most taxation regimes have some form of sales tax, and frankly it is difficult to imagine Jersey never having some form of sales tax; after all, we have to have taxation revenue from several different sources.

However, I oppose the introduction of GST at this time because I believe we could adopt other taxation measures first – such as land development taxes, property speculation windfall taxes and land value tax – and that the Jersey economy will be harmed by the addition of a sales tax at this time.

Jersey already has the highest high street prices you will find anywhere in the British Isles. Goods in the Isle of Man are cheaper than in Jersey and that includes a sales tax of 17.5%!

Jersey has to tackle inflation and its high cost base before a sales tax should be introduced. Sales taxes are also highly regressive; that is they impact more heavily upon those on lower incomes. I believe we should begin our search for new taxes by targeting those who could afford to pay more.

I also strongly oppose GST with no exemptions. I think it wholly unacceptable to start taxing basic foodstuffs, such as bread, milk, fruit etc, when food prices are already so high in Jersey. It is also deeply misguided for Jersey to be placing a sales tax on doctors’ bills and medicines, when only a handful of other countries in the world tax health care.

I am in favour of the Goods and Services Tax because there are no other viable options, it means everyone contributes and the low income earners can be protected etc by the new low income scheme coming into force in 2007

I am in favour of diversifying Jersey's present narrow tax base which depends too heavily on direct tax (Income Tax). We also need to broaden the tax base so that some taxes are paid by everybody. However we have to ensure that the less well off are not unduly penalised I am in favour of GST at a low rate of 3%, combined with an improved income support system.