Part of the problem with the introduction of GST, and why the "protest vote" in petitions etc seems to great is I think because of the attitude of the States.
When GST came up, various amendments were made calling for exceptions to the law. The States members (mostly) voted these all down (apart from medical care). This surely sent out a very firm message to the voters - we are not prepared to make any compromises on the GST model as we perceive it - which came over as very arrogant and Nanny State - we know what is best, and we don't make mistakes.
Had the States considered these exceptions from the point of view of political expedience and shown willing to give some ground, then the protest movement would have been severely hampered; they could not argue that the States had not listened.
To say that politicans who are clearly listening, and raising the matter by drawing public opinion to the matter, is mischievous, just shows how badly the States handled the issue, and continue to do so.
Terry Le Sueur is not particurly clear with his pronouncements as a recent letter in the JEP demonstrated (see below), as he appears to have ignored the issue on overheads with his comments on end user only paying where companies are registered for GST, and ignoring that they cannot claim on indirect costs.
As far as internet and mail order sales go, the whole enterprise is a complete botch, and as I stated years ago when the idea of GST was first mooted, it would have been more sensible to have an Isle of Man model with reciprocal arrangements with the UK so that (a) the same items would be covered (b) because of that, UK retailers - as with the Isle of Man - would not have to do much to allow for GST to apply to goods sold to Jersey (c) internet and mail order could be caught too - by the reciprocal arrangement (which would have legal force for goods sold to Jersey from the UK).
Jersey, as usual, decided to go its own way, and make its own (and probably costly) mistakes, and reinvent what looks more and more like a square wheel.
States should at least be honest with us
From David Rotherham.
24/09/07 |
| IT was kind of Senator Le Sueur to offer us his reassurance about the effects of GST (JEP, 19 September). However, there is an unsatisfactory lack of clarity in his letter, for which I can think of at least three plausible alternative explanations.
The reason that I hope is correct, is that the Treasury have successfully debugged the GST proposal, but, having taken criticism about government spin to heart, no longer have the skilled PR consultants to present their remedies effectively.
Other possibilities, that it would be unkind to dwell on, are that the Senator hopes that we do not understand what he is doing, so that he thinks that he can get away with disingenuous evasions, or even that the poor man does not understand what he is doing himself. Obviously, I would not claim that the last one is the truth, only that it is capable of accounting for his plans and comments.
Anyway, my unanswered anxiety is that the distinction between exemption and zero-rating is very poorly understood in Jersey, by taxmen and businessmen alike.
Firstly, it has not been made clear that all GST will be recoverable on the sale of an untaxed item, or how it could be. Senator Le Sueur's own estimate is that three-quarters of local businesses will be unregistered, so they will not be claiming back any, for a start, but will be having to defend their margins by passing it on. For the other quarter, they will be paying GST not only on costs that can be clearly assigned to specific sales and duly claimed against, but also on overheads, where they are effectively the end consumer, and can only cover them from general revenue, without any direct link to actual transactions.
Secondly, the Treasury Minister lumps exemptions and zero-rated items together as untaxed. The crucial difference is that tax paid on the direct costs of a zero-rated sale can be reclaimed, with only the time and effort of doing so spent. Exempt means out of the system and unable to claim a penny. Trade organisations and the Treasury should both be spelling this out, because at present a lot of people who need to know the difference don't, and at least one who ought to know the difference is disregarding it.
Maybe it won't put 5% on prices, but nor will the effect be as minimal as Senator Le Sueur wishes us to believe. Rescindment remains the best thing to do with GST, but if the States are hell-bent on going through with it, they could at least give us honest warnings of what we shall be facing.
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