Reform launches fresh bid to remove GST from food

Monday 12 September 2022

The largest single party in the States Assembly has launched another attempt to remove GST from food.

Reform Jersey has announced that one of its ten States Members, St. Saviour Deputy Raluca Kovacs, will be lodging a proposition next month to exempt food from the 5% goods and services tax.

If passed by the 49-seat Assembly, GST would come off food from next May.

Deputy Kovacs believes that this attempt will pass while others have failed because the previous counter-argument – that introducing exemptions would be too complicated and expensive – is no longer relevant.

She said: “Having discussed the implementation of my proposal with several of the Island’s leading retailers, it has been indicated that changes to IT systems can be applied and run across numerous stores, with similar responses being received when discussing with smaller retailers. 

Pictured: Reform party member Deputy Raluca Kovacs is bringing a proposal to the States for debate next month.

“Additionally, clear criteria for exempted food items are precedented in the approach of the UK and its VAT.”

Removing GST from food was an election pledge of Reform, which had a strong showing in June, particularly in town districts. It argues that GST is a regressive tax which hurts those on lower incomes the most.

The party says that taking 5% off food would help those struggling in the current economic climate.

Deputy Kovacs said: “The threat of the cost-of-living crisis to islanders is clear. Some food suppliers have already increased their prices three times this year, when a once-a-year price increase would be the norm. 

“Indeed, indications from organisations such as the Channel Island Co-Operative Society, Grace Trust Jersey, Salvation Army, and Society of St. Vincent De Paul highlight the increasing numbers of islanders needing help in obtaining basics such as food, the increased use in food banks, as well as the impact that GST has on charitable donations of food.”

Critics of GST exemptions have argued that, conversely, removing the tax off food would benefit higher earning family even more.

Reform, however, says that the lower income families spend a greater proportion of their income on food and other basics. The party adds that, because of rising prices and the fact that GST receipts are increasing anyway, the Government would not be financially worse off if they lost the tax revenue from food.