Goods and Services Tax (Jersey) Law 200- Commentary on Amendments

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A decision made (12/04/2007) regarding: Goods and Services Tax (Jersey) Law 200- Commentary on Amendments.

Subject:	Goods and Services Tax (Jersey) Law 200- Commentary on Amendments
Decision Reference:	MD-TR-2007-0044	Exempt clause(s):		N/A
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		N/A
Telephone or e-mail Meeting?	N/A	Report File ref:		SL/3/04/04/07
Written Report – Title	Goods and Services Tax (Jersey) Law 200- Commentary on Amendments	Written report - author		Steve Lowthorpe – Director, GST
Decision(s): The Minister agreed to lodge the attached Commentary on the Amendments to the Goods and Services Tax (Jersey) Law 200-
Reason(s) for decision: On the 3rd April 2007 Deputy A. Breckon lodged au Greffe Amendments to the Goods and Services Tax (Jersey) Law 200- . Following analysis of these amendments a Commentary in response to these Amendments is found in the attached Report.
Action required: Deputy Treasurer to arrange for the Commentary on Amendments to the Goods and Services Tax (Jersey) Law 200- to be lodged au Greffe.
Signature: (Minister / Assistant Minister)			Date of Decision: 12th April 2007

Goods and Services Tax (Jersey) Law 200- Commentary on Amendments

TREASURY AND RESOURCES MINISTER

Goods and Services Tax (Jersey) Law 200- COMMENTARY ON Amendments

1. Purpose of Report

The purpose of this Report is to gain Ministerial approval for the lodging of

a Commentary on Amendments to the Goods and Services Tax (Jersey) Law 200-.

2. Background

The States Assembly agreed on 13th May 2005 (P.44/2005) to introduce a broad-based, 3% Goods and Services Tax (GST) as from 2008. In the light of this decision, and following extensive consultation during 2006 with the business community and the wider public, law drafting on the above law has now concluded and the final draft of the law was lodged au Greffe for debate by the Assembly on 17th April 2007. Deputy A. Breckon lodged Amendments to the GST Law on 3rd April 2007

3. Responding to the Amendments

Following detailed analysis of the proposed Amendments to the Law a Commentary is given in Annex A.

4. Recommendation

That the Minister approves the lodging au Greffe of the Commentary on Amendments to the Goods and Services Tax (Jersey) Law 200- outlined above and agrees to direct the Deputy Treasurer to make the necessary changes and lodge the Commentary to the Amendments au Greffe.

States Treasury For Ministerial Decision meeting on 12th April 2007

Annex A

COMMENTS OF THE TREASURY AND RESOURCES MINISTER ON AMENDMENTS TO P.37 (GOODS AND SERVICES TAX : DRAFT LAW) LODGED BY DEPUTY ALAN BRECKON OF ST. SAVIOUR

The Deputy’s amendment is in three parts. However the amendments to Articles 31 and 32 really appear to be consequential upon adopting his proposed amendment to Article 94.

The proposed amendment to article 94 would enshrine in primary law a decision which is perhaps better achieved by Regulations, and the Draft Law allows for this to happen. Indeed it is sufficiently flexible to allow inclusive pricing as the norm, but with power to deal with particular issues. Enshrining the principle in primary legislation does give a greater element of certainty, but equally makes it harder to amend, should circumstances change in the future.

The amendment to Article 94 would put Jersey in a situation somewhat similar to that which pertains in Canada and the U.S.A. However the USA regime appears to be more akin to a retail sales tax, and is therefore not strictly comparable. A better comparison might be with the remainder of the world, and in particular the situation in the U.K. and throughout mainland Europe, where GST- inclusive (or VAT-inclusive) prices ‘at the shelf edge’ are the norm. For Jersey to adopt the Deputy’s amendment would be to put us a variance with the majority of our neighbours, and no doubt be the source of confusion and criticism from our many visitors.

The amendment may have been motivated from a desire for consumer protection, but this will actually depend on a variety of factors, since shopkeepers are at liberty to charge whatever they wish for their goods, and it is for the consumer to decide whether or not to buy at that price. For those retailers which are subsidiaries of U.K. multiples, there may be an incentive to add a further 3% to what already may be a higher marked price. Consumer protection can work both ways, and what is really necessary is the ability of customers to make an informed choice.

The amendments of Deputy Breckon are therefore not supported.