Jersey politicians reject proposal to remove GST from food

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Shopper with his groceriesImage source, PA Media
Image caption,
Ministers said the cost of removing GST would mean less money could be targeted at those in the most need

Jersey politicians have rejected an attempt to remove goods and services tax (GST) from food in an effort to ease cost of living pressures.

The decision means the 5% GST will continue to be charged on all food sold on the island.

Supporters had argued removing the tax would help islanders deal with soaring food prices.

But those opposed to the idea said targeted help with food bills was already available to islanders.

Reform Jersey Deputy Raluca Kovacs, who was behind the proposal, said food costs were a big concern for islanders.

"At this point in the economic crisis it's not just low income people it's the middle class," she told the BBC.

"Food banks are saying they have an increased number of people with full-time salaries going and addressing them because they can't make ends meet by the end of the month with their salary.

"It's really that acute. It needs to be addressed."

'Unfunded'

But ministers said the "unfunded" proposal would create a £10m hole in public finances and disproportionately benefit higher income households.

They said more than 4,000 eligible islanders have already claimed the Community Costs Bonus - a £516.50 annual benefit designed to help households just above the Income Support benefit threshold with the cost of GST on food.

Treasury Minister Deputy Ian Gorst said more than half of the estimated £10m cost of the proposal would go to the wealthiest households.

"The lowest 20% of households will only receive a little more than £1m - that's 12% of the overall £10m," he said.

"I don't think that is a good use of islanders or taxpayers' money.

"If we adopt this proposition we would be reducing the government's ability to target more help directly to those who need it most."

The proposal was voted down with 28 States members against and 17 in favour.

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