We have to ask ourselves: are we, as a government, morally bankrupt when we are taxing pensioners on a loaf of bread?
So said Alan Breckon, a Deputy (MP) in the States of Jersey last week to the Guardian, as reported by Duncan Campbell. The comment was made in anticipation of a demonstration yesterday in St Helier, Jersey by at least 1,200 people (curiously referred to as 'hundreds' of people by the BBC), all of whom support the Jersey Consumer Council petition to stop the Good and Services Tax (GST) that is being introduced in the island.
15,000 people have protested at the new tax, which is being introduced at 3%. But as everyone knows, this can only be a stop gap. Jersey has now admitted that the new tax 0% tax regime that it is introducing for companies will cost the island at least £100 million of lost revenues a year (a figure now creeping towards my own, and I am certain more accurate, estimate of £118 million). GST cannot, according to the Island's own consultants raise much more than £10 million per 1% tax rate. So the eventual rate of tax will be at least 10% or more as certainly as night follows day.
And this will be paid on almost all purchases, including food, medicines, books, education and the other essentials that are all zero rated or exempted in the UK and much of Europe. This is a horribly regressive tax, especially as yacht fuel somehow managed to get on the zero rate list, and the finance industry has a special arrangement so that unlike smaller local businesses it will not need to keep detailed GST records but can instead pay a fixed sum per annum (of a generously low amount per company) and thereafter ignore the whole tax. Even the admin burden has been shifted to the less well off in that case.
Of course the people of Jersey are upset. So they should be. They were assured that being a tax haven would provide their island with the income it needed to ensure their standard of living could match that of elsewhere. It's not much of a justification, but it worked for them at a time when the harm tax havens caused was not widely appreciated. Now they know that their Island is almost universally despised for the corruption it facilities and they now face the ignominy of having to pay a high rate of tax to subsidise those undertaking this attack on the word's democracies, financial systems and poorest people. Wouldn't you both hang your head in shame and be very angry indeed? Especially when your cost of living is one of the highest in the world (which gives lie to the suggestion of a high standard of living) and housing costs make much of London look cheap?
Alan Breckon is right. This is the action of a morally bankrupt government, a government who had the nerve to say its opponents had made no suggestion of alternatives, which they know to be untrue, and who told people not to bother to protest because it would change nothing.
They're wrong. For many people in Jersey GST is going to massively increase their tax bill over the next few years. It will probably double it for very many people based on current data. I can't see them putting up with this. Votes will count in the end. I suspect the days of Jersey as a tax haven are numbered.
And rightly so. It is morally bankrupt already. It will be financially bankrupt soon. Then the chance to rebuild will arrive. And it will happen.