GST clears the final hurdle
FEW, if any, taxes are popular, and GST, which will now be introduced on 6 May, has already shown itself to be less popular than most in many sectors of Island society. The 19,000-signature petition against the tax offered a powerful indication of the strength of public opinion on this issue. In addition, it was evident in the States earlier this week that at least 17 States Members were of the opinion that GST is to be introduced prematurely.
To their credit, however, most members of the Council of Ministers have stuck to their guns on the new tax, consistently maintaining that it is a necessary evil if we are to weather economic storms that are still likely to break as other fiscal changes take effect.
This week’s debate, during which Senator Len Norman sought to put off GST for a year, examined the idea that Jersey is currently doing far better than expected and that surpluses mean that a delay is warranted. There was some merit in Senator Norman’s publicly popular — and populist — view, but his proposition’s ultimate defeat was nevertheless justified.
The point is that the approach urged by Treasury Minister Terry Le Sueur, and backed without reservation by a majority of the Council of Ministers, acknowledges the importance of the precautionary principle. It is possible that the Island will continue to do much better economically than has been forecast, but this is by no means certain. There are many scenarios in which GST will not be some sort of optional extra but absolutely vital if our books are to balance.
In spite of this, GST and the manner of its introduction remain real causes of concern.
It is, for example, worrying that for far too long there was a failure to realise that the original plan to bring in GST on 1 May could have led to chaos among businesses.
The present arrangements, which allow a long weekend of preparation, will offer at least some chance of a smooth transition to the new system.
Meanwhile, the real dangers of GST lie not in its introduction at the rate of three per cent.
After the three years at which the rate must be pegged, our political representatives will have to exercise great restraint if hikes in the tax are not to be seen as the instant answer to all future revenue shortfalls.
Does the JEP really believe this will stay at 3%? And the extra week to prepare comment is a laugh.