Jersey's politicians have rejected a proposition to make food and fuel exempt from goods and services tax (GST).
The proposition was brought by Deputy Andrew Green but was rejected by 26 votes to 24 after a day of debate.
The States of Jersey has decided to increase GST to 5% from June 2011.
In his summing up, Deputy Andrew Green said GST was "regressive" and "morally wrong."
He said: "Even if you think we are making things complicated, and I don't think we are, compared to the intellectual property law, I think this is a relatively simple one.
"Even if you think we are making things complicated, do you support complexity versus simplicity or right over wrong?"
Earlier Jersey's treasury minister withdrew an amendment calling for a rise in the GST to 6%.
Senator Philip Ozouf said: "I sense the mood of the assembly and am willing to withdraw - there is clearly little support.
"I wish no offence to any members in relation to the issues, the issues were always about the exemption issues."
On Wednesday members voted against freezing GST at the current 3% rate.
The States continues to debate the 2011 budget.