GST? No regrets

Friday 03 February 2023

The man who was in charge of Jersey's government when the island introduced its goods and services tax has told Express that he has no regrets and it was absolutely the right thing to do.

Frank Walker was Chief Minister of Jersey between 2002 and 08, having first been elected to the States of Jersey in 1990.

While Chief Minister he led the States through debates on introducing a goods and services tax of 3% - which ultimately was approved and introduced in 2008.

That GST now stands at 5% and is levied on all items including food.

With Guernsey now looking at introducing a GST of 5% - along with changes to its tax and social security contribution rates - Mr Walker has told Express that he thinks Jersey was right to do it years ago.

Pictured: Deputies Peter Ferbrache, Dave Mahoney, Jonathan Le Tocq and Peter Roffey presented their Tax Review proposals last November - the debate will continue later this month.

"What caused it was a decision the Isle of Man government took when they introduced Zero 10 and both Jersey and Guernsey felt at the time, correctly, that we had to react or else we'd have seen a significant outflow of investment in our finance industries to the Isle of Man," he recalled. 

"I can't speak for Guernsey but as far as Jersey was concerned, it created a very significant hole in our finances which we decided needed to be plugged."

Mr Walker said the decision to plug the gap using a goods and services tax was made after many months of consideration, using high level advisors.

Two alternative ideas - to increase income tax or a new payroll tax - were discounted and the States of Jersey settled on GST.

Mr Walker said GST was seen as the "least worst" option.

Pictured: A rally held in Guernsey against GST attracted thousands of people.

"Nobody liked it, nobody wanted it, but we had to do something significant and we decided that GST was the least worst so ultimately it was introduced in 2008."

Much like in Guernsey, the proposed introduction of GST was resisted with a petition signed by 17,000 people which Mr Walker said was unprecedented.

"Despite that we had no doubts at all that we had to do something as GST was, as I've already said, the least worst option, and States Members of the day had the courage and determination to go ahead despite that massive level of opposition."

Mr Walker said there seems to be little opposition to it now - and people are more accepting of it. He said it has never risen rapidly - just increasing by 2% in recent years.

Similarly to the scheme proposed in Guernsey, Jersey's GST came in with changes to income tax to help lower earners. Mr Walker believes together those measures have helped poorer families in Jersey while not affecting richer ones with luxury items still selling well in his home island. 

Asked if introducing GST was the right thing for Jersey, Mr Walker said: "Categorically yes". 

Listen to Mr Walker's interview in full below: