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A decision made 14 July 2011 regarding:

Decision Reference: MD-TR-2011-0092
Decision Summary Title:	Comments on P81/2011: Goods and Services Tax: exemption or zero-rating for health foods Amendment		Date of Decision Summary:	14th July 2011
Decision Summary Author:	Head of Decision Support		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Comments on P81/2011: Goods and Services Tax: exemption or zero-rating for health foods Amendment		Date of Written Report:	14th July 2011
Written Report Author:	Head of Decision Support		Written Report : Public or Exempt?	Public
Subject: Comments on P81/2011: Goods and Services Tax: exemption or zero-rating for health foods, Amendment.
Decision(s): The Minister approved the Comments on P81/2011: Goods and Services Tax: exemption or zero-rating for health foods, Amendment.
Reason(s) for Decision: To enable the Minister’s comments on P81/2011: Goods and Services Tax: exemption or zero-rating for health foods, Amendment to be presented to the States.
Resource Implications: None
Action required: Greffier of the States to be requested to present attached comments to the States at the earliest opportunity.
Signature:		Position: Senator P F C Ozouf Minister for Treasury and Resources
Date Signed:		Date of Decision:

Goods and Services Tax: Exemption or Zero-Rating for Health Foods - Amendment (P.81/2011): Comments of the Minister for Treasury and Resources

COMMENT TO “GOODS AND SERVICES TAX: EXEMPTION OR ZERO-RATING FOR HEALTH FOODS (AMENDMENT)” : P81/2011 (amd)

Comment

The Minister for Treasury and Resources recognises Deputy Pitman’s acceptance of his comments regarding the unfeasibility of the original timescale proposed in her amendment.

However, notwithstanding the removal of the time constraints which made the original proposition unfeasible, the rest of the comment still stands.

In particular:

It will be difficult if not impossible to prepare a definitive list of “healthy” food which would not be subject to constant challenge and change as thinking about nutrition evolves.

There is no evidence that reducing the cost of healthy foods increases consumption of those foods amongst lower income groups.

Reducing the cost of healthy food by 5% will not offset the price differential between many healthy and unhealthy choices. Reducing the cost is more likely to benefit those on higher incomes who would have chosen to buy the more expensive healthier option anyway.

Income support and the GST food bonus have been designed to offset the cost of GST on food for those on lower incomes. This is a far more targeted way of protecting the less well off in our society from the impact of GST, rather than giving a blanket exemption which may well be of more benefit to the better-off.

Jersey’s GST system is based on the New Zealand GST regime, which is widely regarded as one of the “best” GST models internationally. New Zealand recently rejected proposals to remove GST from healthy food because it felt there was not enough evidence that the damage to the GST regime’s simplicity and efficiency would be outweighed by benefits to taxpayers.

Concern voiced in New Zealand, which is equally valid in Jersey, was that allowing one group of products to be excluded from GST on social grounds would lead to calls for other exclusions in the future, thus compromising the rationale of the system (broad tax base and low tax rates) still further.

Statement under Standing Order 37A [Presentation of comment relating to a proposition]

As the States sitting in which this amendment is to be discussed is starting a day earlier than usual, the deadline for lodging comments is also a day earlier, being noon on the preceding Thursday instead of the usual Friday. The comment was not approved by the Minister for Treasury and Resources until 14 July 2011 due to the need to refer it to the Council of Ministers at their Thursday meeting.

The Minister would also point out that the Deputy's amendment was not received until Wednesday 13 July and that this comment will be presented on Thursday 14 July.