Jersey’s Perspective on the Goods and Services Tax

Following Guernsey’s decision to implement a Goods and Services Tax (GST), a measure adopted after States members rejected an income tax hike, BBC News gathered perspectives from residents of Jersey. Jersey has operated with a form of GST for the past 16 years, offering insights into its impact and public sentiment. Gwen Civi, 90, stated, “Everything goes up, up, up all the time.” She further elaborated on her recent experience, noting, “We’ve just had decoration done at home and the amount of GST we paid on that was horrific. It does make things much more expensive.” The Goods and Services Tax was first implemented in 2008, applying a 3% levy to the majority of goods imported to the island. This introduction was a direct response to a decline in tax revenue from the finance sector. Upon its introduction, there were calls from critics for exemptions to be made for essential items such as food, children’s clothing, and school books. The GST rate has been fixed at 5% since 2010. More recently, in 2022, political figures dismissed suggestions to exempt food from the tax, which had been put forward as a measure to alleviate the cost of living. Mark Le Brocq commented, “I’d rather not have it, ideally, but it’s been around for a while now so I’m probably used to it. 5% I think people can live with.” The 45-year-old expressed concern that Guernsey might experience a reduction in trade from Jersey residents, who currently travel there for specific, more affordable goods. He illustrated this by saying, “I’ve got a boat so I could potentially go over to Guernsey…if I was going to buy something expensive, I’d take the boat over there, buy it over there. I think [having GST in Guernsey] it would affect visitors.” Jenny Burden, 69, remarked, “I don’t like it but I was surprised Guernsey said they’re going to introduce it.” She also noted that escalating prices, compounded by GST and high inflation rates in recent years, have presented significant difficulties. She further explained, “GST makes everything so expensive on the essentials; food, electricity. It gets put on everything, the telephone and everything.” Ms. Burden added, “We just shop for the cheapest food we can buy and we have no choice on the electric, we’ve only got one supplier.” She emphasized the particular hardship faced by individuals on lower incomes and pensioners, whose pensions often do not cover all expenses, necessitating reliance on family for additional needs. Ms. Burden concluded that GST had “made life very much harder” and that she observes its cumulative effect on her personal budget “when you add it up over a month.” Fiona Shilliday pointed out that the application of GST to food ensures that no one can avoid paying the tax. She stated: “At the time it was introduced because it was replicating VAT as an added tax. I understood when it came in at a small amount that that wasn’t going to last… I [can] choose to buy something that has GST added, but I can’t not buy food. If it was even reduced on food only, then that would be a great benefit, not just to me but to everyone else on the island.” Jersey’s treasury minister, Deputy Elaine Millar, has defended the policy of applying GST to nearly all goods and services since its inception, stating: “Our approach has been low, broad, simple and fair.” She added: “The simplicity involved in charging everything makes it easy to administer and easy to understand. If we hadn’t introduced GST, we may have had to do something else.” Deputy Millar also suggested that Guernsey should consider strategies for government support to low-income families once the tax is implemented. She elaborated, “We introduced, I think, at that point, a forerunner to reflect the fact that it would have a greater impact on people on low earnings. We introduced the Community Cost Bonus, which is still alive and well, and is still being paid out to low income families to help them with elements like GST.” Concurrently, as average islanders experience financial pressure, a 15% tax rate for larger corporations was established in September 2024. This measure is intended to deter businesses from relocating from the Channel Islands to regions offering no or reduced tax thresholds. Most businesses will continue operating under the zero-ten framework, which sets the standard corporate tax rate at 0%, with finance companies paying 10%. In Guernsey, proposals for introducing GST were rejected twice during 2023. The government had been advised that without an increase in income tax, public initiatives, such as hospital expansion and the construction of additional housing, might face cuts.