States Meeting Transcript - 18/04/2007

STATES OF JERSEY

OFFICIAL REPORT

WEDNESDAY, 18th APRIL 2007

PUBLIC BUSINESS (resumed)................................................................6

1. Draft Goods and Services Tax (Jersey) Law 200- (P.37/2007) ..........................6

The Bailiff :....................................................................................6

1. Senator T.A. Le Sueur (The Minister for Treasury and Resources): ......................6 The Bailiff :....................................................................................6
2. Senator T.A. Le Sueur:..................................................................6 The Bailiff :....................................................................................6

1. Deputy P.J.D. Ryan of St. Helier : ........................................................6
2. Senator S. Syvret:........................................................................7
3. Senator T.A. Le Sueur:..................................................................8
4. Deputy J.B. Fox of St. Helier:............................................................8 Mr. W.J. Bailhache Q.C., H.M. Attorney General:.............................................8
5. Deputy R.G. Le Hérissier of St. Saviour:................................................8
6. Mr. W.J. Bailhache Q.C., H.M. Attorney General:.......................................9
7. Deputy S.C. Ferguson of St. Brelade : ....................................................9

Senator T.A. Le Sueur:.......................................................................10

8. Connétable K.P. Vibert of St. Ouen:....................................................10
9. Connétable D.J. Murphy of Grouville :..................................................10
10. Deputy P.J.D. Ryan:.................................................................10 The Bailiff :...................................................................................10
11. Senator T.A. Le Sueur:..............................................................12 The Bailiff :...................................................................................12

3. Senator T.A. Le Sueur:.................................................................12 The Bailiff :...................................................................................12

1. Deputy P.J.D.Ryan:....................................................................12
2. Deputy D.W. Mezbourian of St. Lawrence : ............................................13 Mr. W.J. Bailhache Q.C., H.M. Attorney General:............................................13
3. Senator T.A. Le Sueur:.................................................................13 The Bailiff :...................................................................................13
   4. Senator T.A. Le Sueur:.................................................................14 The Bailiff :...................................................................................14

1. Deputy A. Breckon of St. Saviour:......................................................14
2. Senator T.A. Le Sueur:.................................................................17
3. Deputy P.J.D. Ryan:....................................................................18
4. Senator L. Norman: ....................................................................18
5. Connétable G.W. Fisher of St. Lawrence:..............................................19 Mr. W.J. Bailhache Q.C., H.M. Attorney General:............................................20
6. Deputy C.J. Scott Warr en of St. Saviour:...............................................20
7. Deputy J.G. Reed of St. Ouen:..........................................................20
8. Senator P.F. Routier: ...................................................................20

9. Connétable M.K. Jackson of St. Brelade:...............................................22 Mr. W.J. Bailhache Q.C., H.M. Attorney General:............................................22
10. Deputy A. Breckon: .................................................................23
11. Senator F.H. Walker :................................................................23 Deputy A. Breckon:..........................................................................23
12. The Connétable of St. Lawrence:....................................................23
13. Deputy G.W.J. de Faye of St. Helier : ................................................24
14. Deputy G.P. Southern of St. Helier:..................................................25 The Bailiff :...................................................................................25 H.M. Attorney General:......................................................................25 Deputy A.J.H. Maclean of St. Helier:.........................................................25 The Bailiff :...................................................................................25
15. Deputy S.C. Ferguson:..............................................................26
16. Senator F.H. Walker :................................................................26
17. Deputy J.J. Huet of St. Helier:.......................................................27
18. Deputy G.P. Southern : ..............................................................27
19. Deputy J.B. Fox:....................................................................29
20. Deputy I.J. Gorst of St. Clement:....................................................29
21. Senator W. Kinnard:.................................................................31
22. Deputy F.J. Hill of St. Martin:.......................................................32
23. Deputy A.J.H. MacLean:............................................................32
24. Deputy P.V.F. Le Claire of St. Helier:...............................................32
25. Deputy A. Breckon: .................................................................33 The Bailiff :...................................................................................35

5. Senator T.A. Le Sueur:.................................................................37

1.5.1 Deputy A. Breckon:....................................................................37 The Bailiff :...................................................................................37

6. Senator T.A. Le Sueur:.................................................................37 The Bailiff :...................................................................................37

1. Deputy G.P. Southern :..................................................................37
2. Senator T.A. Le Sueur:.................................................................37 The Bailiff :...................................................................................38 Senator T.A. Le Sueur:.......................................................................38

7. Senator T.A. Le Sueur:.................................................................38

1. Deputy R.G. Le Hérissier: ..............................................................38
2. Deputy P.N. Troy ofSt.Brelade:.......................................................38
3. Senator T.A. Le Sueur:.................................................................39 Deputy P.J.D. Ryan: ..........................................................................39 The Bailiff :...................................................................................40

NOTIFICATION OF LODGED PROPOSITIONS............................................41

2. The Bailiff :.............................................................................41

PUBLIC BUSINESS (continued) .............................................................41

3. Draft Sea Fisheries (Licensing of Fishing Boats) (Amendment No. 3) (Jersey) Regulations 200- (P.15/2007)............................................................41

The Bailiff :...................................................................................41 3.1 Deputy A.J.H. Maclean (Assistant Minister for Economic Development):..............41 The Bailiff :...................................................................................42 Deputy G.P. Southern (Chairman of the Economic Affairs Scrutiny Panel):..................42 The Bailiff :...................................................................................42

4. Draft Règlements (200-) sur le tarif des honoraires des Jurés-Justiciers, (P.21/2007) 42

The Bailiff :...................................................................................42 Senator F.H. Walker (The Chief Minister):...................................................43 4.1 The Deputy of St. Clement (Assistant Minister, Chief Minister's Department): ........43 The Bailiff :...................................................................................43 The Bailiff :...................................................................................43 Deputy P.J.D. Ryan (Chairman of the Economic Services Scrutiny Panel):...................43

ADJOURNMENT PROPOSED.................................................................44 LUNCHEON ADJOURNMENT................................................................44

PUBLIC BUSINESS (continued) .............................................................44

5. Draft Employment (Amendment No. 3) (Jersey) Law 200- (P.24/2007) ...............44

The Deputy Bailiff :...........................................................................44 5.1 Senator P.F. Routier (The Minister for Social Security):................................44 The Deputy Bailiff :...........................................................................45 Deputy A. Breckon (Chairman of the Health, Social Security and Housing Scrutiny Panel):..45 Senator P.F. Routier:..........................................................................45

6. Draft Housing (General Provisions) (Amendment No. 25) (Jersey) Regulations 200-, (P.31/2007)...............................................................................45

The Deputy Bailiff :...........................................................................45

1. Senator T.J. Le Main (The Minister for Housing): ......................................45
2. Deputy A. Breckon:....................................................................46
3. Deputy P.V.F. Le Claire: ...............................................................47
4. Deputy R.G. Le Hérissier: ..............................................................47
5. Deputy C.J. Scott Warr en: ..............................................................47
6. The Deputy of St. Martin:..............................................................47
7. Deputy G.P. Southern :..................................................................47
8. Senator P.F. Routier: ...................................................................48 Deputy R.G. Le Hérissier:....................................................................48 Senator P.F. Routier:..........................................................................48
9. Connétable T.J. du Feu of St. Peter:....................................................48
10. Senator F.E. Cohen:....................................................................49
11. Deputy J.B. Fox:........................................................................49
12. The Connétable of St. Brelade:.........................................................49
13. Deputy K.C. Lewis of St. Saviour:......................................................49
14. Senator T.J. Le Main: ..................................................................50 The Deputy Bailiff :...........................................................................51 The Deputy Bailiff :...........................................................................53 Deputy A. Breckon (Chairman of the Health, SocialSecurity and Housing Scrutiny Panel):..53 The Deputy Bailiff :...........................................................................53

7. Draft Customs and Excise (Amendment No. 4) (Jersey) Law 200- (P.32/2007)........53

The Deputy Bailiff :...........................................................................53 Senator W. Kinnard (The Minister for Home Affairs):........................................54

1. Deputy A.D. Lewis of St. John (Assistant Minister for Home Affairs):.................54
2. The Deputy of St. Martin:..............................................................54
3. Senator L. Norman: ....................................................................54
4. Deputy J.B. Fox:........................................................................54

5. Deputy P.N. Troy : ......................................................................55
6. The Connétable of St. Peter:............................................................55
7. The Connétable of Grouville :...........................................................55
8. Senator F.H. Walker :...................................................................55 Deputy J. Gallichan of St. Mary:..............................................................56 Deputy J.B. Fox:..............................................................................56
9. Deputy P.V.F. Le Claire: ...............................................................56 Deputy R.G. Le Hérissier:....................................................................57
10. Deputy C.J. Scott Warr en: ..............................................................57 Mr. W.J. Bailhache Q.C., H.M. Attorney General:............................................57 The Deputy of St. John:......................................................................58
11. Senator T.A. Le Sueur:.................................................................58
12. Deputy K.C. Lewis :....................................................................58
13. Deputy S.C. Ferguson:..................................................................58
14. Deputy S. Power of St. Brelade : ........................................................58
15. Senator W. Kinnard:....................................................................59 The Deputy Bailiff :...........................................................................59

8. Annual Business Plan 2007: Property Plan (P.34/2007)................................59

The Bailiff :...................................................................................59 Senator J.L. Perchard:........................................................................59 The Deputy Bailiff :...........................................................................59 Deputy P.J.D. Ryan: ..........................................................................60

Deputy P.N. Troy : ............................................................................60 Deputy J.A.N. Le Fondré of St. Lawrence : ...................................................60 Senator P.F. Routier:..........................................................................60 Senator F.H. Walker :.........................................................................60

1. Senator Le Sueur:......................................................................60 The Deputy Bailiff :...........................................................................62

1. Deputy A. Breckon:....................................................................62 Deputy J.A.N. Le Fondre:....................................................................63
2. The Connétable of Grouville :...........................................................63
3. Senator T.A. Le Sueur:.................................................................63
4. Deputy J.A. Hilton of St. Helier:........................................................64
5. Deputy C.J. Scott Warr en: ..............................................................64
6. Senator T.J. Le Main: ..................................................................64
7. Deputy R.G. Le Hérissier: ..............................................................65
8. The Deputy of St. Ouen:................................................................65
9. Deputy G.W.J. de Faye:................................................................65
10. Deputy J.A.N. Le Fondré: ...........................................................67
11. Deputy J.B. Fox:....................................................................67
12. Deputy J.J. Huet:....................................................................68
13. Senator F.H. Walker :................................................................69 The Connétable of Grouville :.................................................................69
14. Senator J.L. Perchard: ...............................................................70
15. Senator B.E. Shenton: ...............................................................70 Senator T.A. Le Sueur:.......................................................................71 Senator T.A. Le Sueur:.......................................................................71 Deputy C.J. Scott Warr en: ....................................................................72
16. Deputy C.F. Labey of Grouville :....................................................72
17. Deputy S.Power:....................................................................72
18. Deputy G.P. Southern : ..............................................................72

19. The Deputy of St. Martin : ...........................................................73
20. Deputy S.C. Ferguson:..............................................................73
21. Senator F.E. Cohen: .................................................................74
22. The Connétable of St. Ouen : ........................................................74 The Deputy of Grouville :.....................................................................74
23. Senator L. Norman:..................................................................74
24. Deputy A. Breckon: .................................................................75 The Deputy Bailiff :...........................................................................76 The Deputy Greffier of the States: ............................................................77

2. Senator B.E. Shenton:..................................................................77

1. Senator S. Syvret:......................................................................78
2. Senator F.E. Cohen:....................................................................78
3. Senator T.A. Le Sueur:.................................................................79
4. Senator P.F. Routier: ...................................................................79
5. Deputy P.V.F. Le Claire: ...............................................................80

6. Deputy C.J. Scott Warr en: ..............................................................81
7. Senator S. Syvret:......................................................................81 Senator T.A. Le Sueur:.......................................................................81
8. Senator B.E. Shenton:..................................................................81 Senator L. Norman: ..........................................................................81 The Deputy Bailiff :...........................................................................81

Senator B.E. Shenton:........................................................................82 The Deputy Bailiff :...........................................................................82

3. The Deputy of St. Ouen:................................................................83

ADJOURNMENT PROPOSED.................................................................86 Senator L. Norman: ..........................................................................86 The Deputy Bailiff :...........................................................................86

ADJOURNMENT................................................................................86

The Roll was called and the Dean led the Assembly in Prayer. PUBLIC BUSINESS (resumed)

1. Draft Goods and Services Tax (Jersey) Law 200- (P.37/2007)

The Bailiff :

Now the debate resumes upon the Draft Goods and Services Tax (Jersey) Law. The debate in Second Reading has reached Article 90.

1. Senator T.A. Le Sueur (The Minister for Treasury and Resources):

I can propose Articles 90 and 91: 90 dealing with obstruction and 91 dealing with dealing in goods. The penalty for obstruction is relatively lower and that for dealing in goods just has an offence of a fine. I propose Articles 90 and 91.

The Bailiff :

They are proposed. Are they seconded? [Seconded] Does any Member wish to speak on either of Articles 90 or 91? I put those Articles. Those Members in favour of adopting them, kindly show? Those against? They are adopted. We move Article 92.

2. Senator T.A. Le Sueur :

Article 92 deals with companies, directors and partners of businesses and those who aid and abet and, again, indicates the penalty for those who take part in such activities. There is an amendment to Article 92 but I propose Article 92 as it stands.

The Bailiff :

They are proposed. Are they seconded?  [Seconded] There is, as the Minister has said, an amendment in the name of the Corporate Services Scrutiny Panel. I ask the Greffier to read the amendment.

The Deputy Greffier of the States:

Article 92; in paragraph 1, for the word "neglect" substitute the words "gross negligence".

1. Deputy P.J.D. Ryan of St. Helier :

The previous 2 amendments and this one all fall into the category very definitely of the scrutiny of legislation in its minutiae. If Members would care to turn to page 33 of our review, and particularly paragraphs 154 and 155 at the bottom, Members will see the references to this particular amendment to do with the treatment of directors in a limited company or managers or other officers. It is to do with personal liability. Before I go much further talking about this, I would like to just - if you do not mind, Sir - remind Members of what happened yesterday evening. It was

0. p.m. Members were tired; so was I. After all, I had been up and down on my feet making speeches yesterday. One ofthose speeches was particularly stressful and was absolutely devoid of any kind of pleasurable experience. However, Senator Norman was absolutely right because he pointed out that my performance in delivering those amendments to the House was jaded. It was. I was tired. Now I would ask Members to look at the detail of this amendment with one eye and listen to what I am saying with their ears. Maybe I was a little bit negligent. I leave Members to decide for themselves as to whether they feel we were a little bit negligent, maybe, because those amendments that we proposed last night were fully researched. We took legal advice from the Attorney General. We took legal advice from our technical adviser who has a degree in law. He is not a practising lawyer, I was wrong there, but he has a degree in law and he is a fully qualified accountant and he is a senior  lecturer in tax law at a well-respected university in the United Kingdom. We looked at that information. We looked at the detail. We also consulted with the

Offices of the Treasury over those 2 amendments, and we noted that the Treasury, initially, had lower prison sentences than the Attorney General had superimposed. We listened to the arguments of the Attorney General with great respect but we were still not convinced. That is why we brought those 2 amendments to the House for your review. Were we a little bit blasé? Were we a little bit negligent in dismissing them so quickly? I leave Members to decide. Now let us come to this amendment. It is over the choice of words. Again, we took all of the advice. We spoke to the right people. We have spoken to the right people. It has been explained to us that there is a particular meaning of the word "negligent" in law. Oh, fine, but is that particular meaning of the word "negligent" in law right? If the precedent has been set in the past of the use of the word "negligent" in company law, were we a little bit negligent if we let it go through? Because, quite honestly, most people's common understanding as lay people of the law is that negligent is one thing but gross negligence, which is what we are attempting to amend to, means to most people something else entirely. What we are saying is that the Law does not do what it says on the tin. Our view is that that is wrong, that a law should mean to common people one thing by their understanding of English, whereas it means something entirely different to lawyers. That is the essence of what we are talking about here. I hope I have explained myself as carefully and as eloquently as possible on what has led us to bring this amendment to the States, because we want the States to give a view as to whether they believe law should do what it says on the tin to ordinary people or whether it is right that lawyers should take a slightly different view to what words mean, other than what is common English. To us, negligent is not sufficient to warrant personal liability under the normal shroud of the corporate veil. We can all be negligent. We can be tired. We can lose control for a short while of someone that reports to us who is likely to be doing the G.S.T. (Goods and Services Tax) returns. That is not excusable, but does it warrant personal liability which could amount to a very large amount of money? Or is it better to raise the bar a little under these circumstances and go for gross negligence, because that is what it means to most of us? Let us give a director or a senior officer of a company the opportunity to make one mistake, maybe, and be negligent, but gross negligence is where, in my view, the personal liability should start coming into it. Just on a final note, I said it yesterday and I will say it again: of course businesses are obliged to follow the law and collect taxes free of charge for us. They would be the first to say: "Of course we will do that."   But I  said  it before  and I  say  it again, we do need the co-operation of the  business community. What is right in our society, what is the right attitude to have for a law like this in our society, we need the co-operation of the business community. What kind of message does this send

out unless we have a proper and correct raising of the bar for personal liability? That is our view. It was properly researched. I hope Senator Norman will not accuse me of being jaded or not being robust enough in my promotion of this amendment. I leave it to Members and will listen carefully to your comments. Thank you.

The Bailiff :

Is the amendment seconded? [Seconded] The amendment is open for debate. Senator Syvret?

2. Senator S. Syvret:

I will not be supporting this amendment because it seems to me there are a number of problems with it. First of all, if you substitute the word "neglect" to replace the words "gross negligence" you reduce the seriousness, scope and scale of the offence. Thus, I think you lose a significant deterrent effect that the Law would have. I would also have imagined - and I am open to correction from the Attorney General - that gross negligence, that actual phrase "gross negligence", is probably very difficult to prove. It would have to be very clear-cut in order to make such a charge stick, I would have thought, in a court of law, whereas simple neglect might be easier to persuade the court to convict on. In any event, it seems to me that there are a number of hurdles that have to be crossed before a prosecution succeeds. First of all, the police or the inspectorate or whoever is looking into it have to merit the matter of sufficient concern to investigate it and compile a report on it. They then have to submit it to the Law Officers' Department, the A.G. (Attorney General) or S.G. (Solicitor General). They will have to inspect it to decide whether it is an offence that merits a prosecution. They will then have to take it to the court and persuade the court that an offence has been committed and then have to persuade the court that the offence is of sufficient gravity to merit any serious punishment. It does seem to me that there are an awful lot of hurdles and safeguards there that would, I think, in reality - in the real world - protect people from unreasonable or excessive investigations and prosecutions because of the word "neglect". So, Sir, I will not be supporting this amendment.

3. Senator T.A. Le Sueur :

I can sympathise with Deputy Ryan in making sure that we understand what this Law is supposed to mean. I am not a lawyer either, so I will bow to legal advice as to how law is interpreted. I will simply point out, as proposer of this Law, that Article 92 in this Law reflects the situation in the other laws of this Island. Were we to accept the amendment, this Law would then be out of step with all those laws. It may be that we are all out of step except Deputy Ryan, but I tend to believe that this Law is consistent with other laws on the Island and also appropriate to this Law. On that basis, subject to any other interpretations which wiser legal minds may be able to give, I could not accept the amendment.

4. Deputy J.B. Fox of St. Helier :

Could I ask through the Attorney General whether, if you take the proposal by the Corporate Services Scrutiny Panel, that if the States made that decision, is it a charge that can be reduced at a court hearing similar to that of assault and grievous bodily harm, et cetera? Or is it one that stands on its own and if you are unable to prove that one, then that is it, you cannot reduce it?

Mr. W.J. Bailhache Q.C., H.M. Attorney General:

No, Sir, you will not be able to reduce it. The way the offence works is that first of all you need to prove that the company or the partnership has committed the offence and that that offence, therefore, has the state of mind and the other provisions which are in the relevant company offences. Having proved that, you then have to prove that the company's offence was committed either with the consent or connivance or attributable to any neglect on the part of the partner or the director. It is not something that can be reduced. It is either neglect or, if the amendment were to be accepted, gross negligence. That is the answer to the Deputy 's question.

Deputy J.B. Fox:

Then I would not be able to support this amendment. The main reason is, as I also said yesterday, that laws are there also to provide prevention. Although they do have the purpose of detection, the primary role in all law is to try and prevent a crime being committed. If you have something that is weak in the first place, there will be people that will not treat the rules and the laws of society seriously and say: "Well, it does not matter." Obviously society or the law makers do not believe it is because otherwise they would not have had such a low margin offence. They would have put it at a far higher degree. In prevention terms, if you get an organisation, company or whoever it is, when they are training their personnel they will be doing  it in such a way to emphasise the importance of accuracy, the importance of why the law was brought in and the reasons behind it. Therefore, I cannot support this amendment. Thank you, Sir.

5. Deputy R.G. Le Hérissier of St. Saviour :

I have some sympathy for Deputy Ryan. I must congratulate the Panel on teasing out these issues. I think they have done an excellent job. This is, quite frankly, a very turgid debate and it does provide a slight degree of interest, so to that extent I must congratulate them. I am worried, Sir. I notice the Attorney General skated over the issue of  "attributable". If there  is a case of an employee who is a rogue employee, you could well argue that is because your structures, your procedures and so forth are not strong enough and, therefore, you must ultimately accept the blame

for that, but I would like to direct to him the question: what does "attributable" mean and does it cover instances like a rogue employee who, despite the best intentions of the management, is manipulating the system and perpetrating a fraud? Secondly, could he give us his definition of the difference between negligence and gross negligence?

The Bailiff :

I think the Attorney General was answering a question from Deputy Fox before, but perhaps we should invite the A.G. to address the matter substantively.

6. Mr. W.J. Bailhache Q.C., H.M. Attorney General:

I will try and take up the questions which Deputy Le Hérissier has asked as well, but starting with the Minister's comments, the language in Article 92 is standard language which appears in many other laws which have been adopted by the States. Indeed, the Criminal Offences (Jersey) Law, which was adopted by the Assembly on 27th February 2007, uses this language and carries it forward for all new offences, whether the offence is committed by a company or a partnership, whether the language appears in future statutes or not. So the States Assembly has already agreed that this principle ought to apply to all criminal offences which are committed by companies or partnerships. It is going to be an oddity if there is a different test in this legislation than a general framework law which the States has passed only 6 weeks ago or so and is awaiting Royal Assent. As I said earlier, the corporation must have committed the offence before the directors are personally liable. As to the question of gross negligence and/or neglect, gross negligence is a phrase that does appear in some statutes which deal with civil liability, particularly things like trustee liability under the Trust Law, and there have been cases on that. I have no doubt that the court will do the best it can. Gross negligence is the test in criminal proceedings, but it is not the usual test that is applied. There is the offence of manslaughter by gross negligence, so there are cases where you can advance this test and they do exist. The right way of looking at it is that it is a higher standard of neglect, if I can put it that way, before the criminal liability exists. If the misconduct of the company is attributable to the neglect, that is not the same thing as being attributable to the gross negligence of a director because the director would have had to have acted considerably worse than just neglect. I would say that the Scrutiny Panel have, if I may say so, gone wrong by talking about infringing the principle of limited liability. That really is a civil law principle and I do not for my part see this as being relevant to the criminal law whatsoever. I think the report of the Scrutiny Panel in that respect is not correct. The question of "attributable to the neglect", which is the second thing that Deputy Le Hérissier asked me, is going to be a question of fact for the court of trial. The court will receive the evidence of the offence which has been committed and, if the director or the partner is indicted as well, will have to decide whether his conduct or something that he has done or not done is so bad that he ought to be fixed with the criminal liability, but that is going to be a question of fact for the trial court. In this case it will mean that the 2 Jurats who are sitting on the trial will have to decide whether they think on the facts which are produced the director has acted in such a way that he or she ought to be fixed with that criminal liability. So it would be a question of fact in each case. If I may say so, I would like to encourage Scrutiny Panels very much to continue an active review of the detail of legislation. I personally think that is a very important thing for Scrutiny Panels to do. But on this occasion, I

respectfully say to the Chairman that the Panel has got it wrong.

7. Deputy S.C. Ferguson of St. Brelade :

Just really as a matter of clarification, in his comments the Minister said he is prepared to accept the views of the Corporate Services Scrutiny Panel and he has just stood up and said he is going to oppose it.

The Bailiff :

Do you wish to respond to that, Minister?

Senator T.A. Le Sueur :

I am happy to admit, Sir, that I made a mistake.

The Bailiff :

But not a grossly negligent mistake. [Laughter] Constable of St. Ouen ?

8. Connétable K.P. Vibert of St. Ouen :

I cannot support this amendment because it seems to me that the 2 previous amendments brought by the Panel and this amendment are totally inconsistent. It appears to me as a layman that the 2 previous amendments were aimed at lessening the offence by reducing the penalty, whereas this amendment appears to me to be attempting to make it a more serious offence. To me that is a totally inconsistent approach.

9. Connétable D.J. Murphy of Grouville :

Very quickly, as a Member of the Panel I got totally confused halfway through as well, but thank goodness we had the benefit of really good legal advice and terrific advice from our adviser. I think at the end of the day any simple person would say that what we were trying to do here is to obviate the chance of a slip of the pen being construed as negligent. We were trying to say that mistakes can be made; they are not necessarily negligent. We thought the words "gross negligence" would, in fact, tie down the offence to an actual offence rather than a mistake.

The Bailiff :

I call upon the Chairman to reply.

10. Deputy P.J.D. Ryan:

I am going to just take up a little time of the Assembly because I think the principle of scrutinising legislation is an important one and we should, therefore, give it the respect and the detail and the time that it deserves. So I am going to take up the time of the Assembly just a little bit. First of all, I would like to address a couple of remarks towards Senator Syvret. I think we all know that intellectually Senator Syvret has certain views, and they are certainly highly respected by me in many places, many ways, but I think that he has a range of views that in some cases could be described as on the left and in some cases quite a long way to the right of the political spectrum. When it comes to company law and when it comes to the question of disciplining those very bad people that run companies for a profit and when it comes to punishing them for their misdemeanours, I believe that Senator Syvret's views fall rather to the right sometimes, if he does not mind me saying so. [Interruption] I would ask Members to bear that in mind when they view what Senator Syvret had to say. Deputy Fox, of course there is prevention in the Law. Of course. Of course, we could maximise the prevention in any law by making it a capital offence. I am only saying that in order to illustrate the point, and the point is that of course there is prevention but it is a question of balance. Our view was that the balance was a little bit wrong here. That is what we are saying. We are not for a minute suggesting that there should not be prevention in the Law. I would like to thank Deputy Le Hérissier for his kind words, generally speaking. Thank you. To Mr. Attorney General, how much scrutiny was there of the Criminal Offences Law? How much did we scrutinise the use of the language in the Criminal Offences Law? Perhaps it was my job to do it. Maybe I was a little bit negligent. [Laughter] A law should do what it says on the tin. This is the point: if we need to change other laws, then that is what we need to consider doing. I leave it there, Sir, and ask for the Appel.

The Bailiff :

The vote is for or against the amendment of the Corporate Services Scrutiny Panel, and I ask the Greffier to open the voting.

The Bailiff :

Now we return to the debate on Article 92. Does any other Member wish to speak on the Article unamended? I call upon the Minister to reply.

11. Senator T.A. Le Sueur :

I thank the Attorney General for clarifying this Article and, in fact, the whole of Part 17. I am sure the House shall be grateful for that advice. I propose Article 92.

The Bailiff :

I put Article 92. Those Members in favour of adopting it kindly show? Those against? The Article is adopted. We come now to Part 18, Article 93.

3. Senator T.A. Le Sueur :

The last part of the Law - the miscellaneous part - is normally a straightforward collection of odds and ends. I suspect in this particular Law Part 18 may take a little bit longer. First of all, in Article 93 we have a fairly standard schedule to give powers of entry and search of premises and persons by authorised people for authorised purposes. There is an amendment to Article 93 but I propose Article 93 in its present form and would not accept an amendment from the Scrutiny Panel.

The Bailiff :

Article 93 is proposed and seconded? [Seconded] There is an amendment to Schedule 8, I think, in the name of the Corporate Services Scrutiny Panel. I ask the Greffier to read that amendment.

The Deputy Greffier of the States:

Page 110, Schedule 8, paragraph 7: renumber the existing text in paragraph 7 as sub-paragraph (1) and add the following sub-paragraph: "(2) The right of entry conferred by sub-paragraph (1) may only be exercised where the authorised officer has reasonable grounds (a) for suspecting that an offence under this Law or the Regulations has been, is being or is about to be committed on the premises; and (b) for believing that there is evidence of such an offence on the premises that would be removed or destroyed before a warrant may be obtained under paragraph 8."

1. Deputy P.J.D. Ryan:

The first thing I am going to say to the Assembly and to you, Sir, is that we are going to seek leave from the Assembly to withdraw this amendment. I do not want to waste the Assembly's time in any way, but I think, therefore, I owe an explanation to the Assembly. First of all, let me say that we did run out of time a little bit in this review.

The Bailiff :

Mr. Chairman, can I just say you are perfectly entitled to withdraw the amendment if you have not stood to propose it. You are just giving an explanation for

Deputy P.J.D. Ryan:

May I give an explanation? I am giving an explanation for our wish to withdraw it, the seeking leave to withdraw it, Sir. We ran out of time a little bit. I will certainly not admit to being negligent now that the last amendment was lost, but because of the choice of words, we were seduced into thinking that this was the place where we would get a situation where the G.S.T. Treasury staff or G.S.T. enforcement staff would be banging down doors in the middle of the night, et cetera. It brought connotations of that kind of circumstances. We carried out further research after the report came out and after the amendment went in, which culminated last Monday in me having a meeting with the G.S.T. Director where it was explained to me that the normal powers that a G.S.T. inspector would need to be in place in order to go and carry out a normal routine G.S.T. inspection on a business premises was contained in this particular Article in the Law. We had assumed that those standard powers to go and make G.S.T. inspections were either in another part of the Law or would come in Regulations and that during the Regulations we would see that particular power. So we made a mistake but we were seduced into making that mistake by the choice of words in the power to enter. It gives that kind of connotation. I think I would ask the Minister to perhaps make a commitment to look again at the wording of that because it does send out the wrong kinds of messages. If it meant that we made the mistake, I am sure that others would make the same mistake. Perhaps if the Minister would be prepared to look at the actual wording of the title, then I am sure that it would be helpful. I seek leave of the Assembly to withdraw the amendment.

The Bailiff :

You do not need leave if you have not moved it, Chairman, so that amendment is withdrawn and the debate continues upon Article 93 in Schedule 8. Does any Member wish to speak on that Article or that Schedule? Deputy Mezbourian ?

2. Deputy D.W. Mezbourian of St. Lawrence :

I just seek clarification in section 11 where it refers to an authorised person executing a warrant who may be accompanied by a police officer during the execution of the warrant. I would like to know whether that applies to a States' Police officer and/or to an Honorary Police officer?

Mr. W.J. Bailhache Q.C., H.M. Attorney General: It applies to both.

The Bailiff :

Does any other Member wish to speak? I call upon the Minister to reply.

3. Senator T.A. Le Sueur :

I am grateful to Deputy Ryan for withdrawing this amendment and explaining why. I do concede that the heading of section 7 of Schedule 8, Power to Enter, could be misinterpreted. I do not draft the headings to the Laws but I take the point, very much so. It is really power to inspect records which is perhaps more relevant, but power to enter is, I think, equally an appropriate phrase if it is understood. With that, Sir, and I think having had Deputy Mezbourian 's question answered by the Attorney General, I propose Article 93.

The Bailiff :

I put Article 93 in Schedule 8. Those Members in favour of adopting them, kindly show? Those against? They are adopted. We come now to Article 94.

4. Senator T.A. Le Sueur :

Article 94 deals with display of retail prices and, again, is the subject of an amendment which may provoke some discussion. I have to say that there are clearly 2 schools of thought in this area as to whether goods displayed on the shelves should indicate what a customer is going to have to pay when they buy the goods or whether there should be a notice at the till saying that when you buy these goods you will be charged an additional 3 per cent. That is an issue on which different Members may well have different views, and I would simply point out that the situation throughout the U.K., Western Europe, most of the Antipodes, in fact everywhere apart from the U.S.A. and Canada, has gone for an inclusive pricing regime. Again, it may be that everyone is out of step except us, but I tend to believe that it would be unusual, to say the least, for Jersey to adopt a regime or an arrangement different from the rest of Europe and most of the rest of the world. I accept that Canada has different arrangements, as has the U.S.A., but I think their taxes are a bit peculiar in that they are not standard G.S.T. My opinion is that, in fact, probably public opinion will ultimately decide that we would like to be consistent with the rest of Europe. I was, in fact, quite heartened by the comments of this Scrutiny Panel in their report which indicated that probably sooner or later that would happen. What Article 94 does is really leave the door open. It is a permissive Law which allows us to make provision for prices in different ways. I will speak about the amendment when it is being proposed, but I think the amendment ties us more clearly into one particular regime. That may be a good thing to give certainty. I would counter that in a situation where there are clearly uncertain views, it is better not to put that into primary legislation but to leave it in Regulations. Therefore, I believe that the present Article in its present form is more appropriate and I propose Article 94.

The Bailiff :

Article 94 is proposed and seconded? [Seconded] As the Minister has said, there is an amendment in the name of Deputy Breckon. I ask the Greffier to read that amendment.

The Deputy Greffier of the States:

Article 94; at paragraph 2 substitute the following paragraph: "(2) Those Regulations may (a) require that advertisements, labels, receipts or other things that are or include expressions or indications of retail prices for goods or services supplied shall make separate mention of and prominently display the amount of the price that consists of G.S.T.; and (b) specify the circumstances in which advertisements, labels, receipts or other things that are or include expressions or indications of retail prices for goods or services supplied shall specify the amount of the price that consists of G.S.T. (i) on each item; or (ii) on the cumulative value of all the goods or services supplied at the same time to a person."

1. Deputy A. Breckon of St. Saviour :

I would like to begin by looking at the timing of this. Members will be aware that it was lodged on 6th March 2007 and here we are some 6 weeks later having this debate. I understand the Law has been delayed in other places, but the question I would ask is, is this a major policy development? I would suggest it does and it drills a long way down and I think there should have been some consultation along the way. I was reminded of this with a report that was before the Council of Ministers on 25th January about public consultation. I would like to quote a couple of extracts from that because I think it is important. It says in this document: "The States accepts that it must keep the public much better informed of its activities to improve mutual understanding and increase confidence and pride in what we do. To add to this, the new system of government will provide greater openness and accountability assisted by the scrutiny process, which will help to engage the community with the work of government. These improved processes are designed to reconnect the

public with its government and establish a stronger sense of citizenship and community so that Jersey becomes a place of confidence in which important issues are honestly presented, widely debated and clearly understood. To do this, the States has agreed (1) to develop a mechanism for effective public participation [and that is contained in the Strategic Plan at bullet point 5.1.2]; and (2) to introduce a framework of formal consultation for all major policy developments" [and that is at bullet point 5.1.3]. I would say that this is a major policy development and I would question where the consultation is. I mentioned yesterday about the road show, but I would say that when this document emerged many organisations and individuals have been ill-prepared to respond to it in a constructive manner - especially, I would suggest, about how Goods and Services Tax is levied at the sharp end. I think the consultation has been none or little and that, I think, may have led to a public disconnect. This report also mentions at page 5 about good consultation and guiding principles. Again, it mentions: "Consultations in Jersey should be based on the principles which underpin States communications, which are; openness not secrecy; direct communication with the public; genuine engagement with the public as part of policy formation and delivery; positive presentation of government policies and achievements; use of all relevant channels of communication; co-ordinated communication of issues that cut across departments; reinforcement of public services' political impartiality. The purpose of consultation is to make the involvement of the public in decision-making effective, opening it up to as wide a range of people and organisations as possible. Effective public consultation will (a) improve decision-making, ensuring that decisions are soundly based on evidence having taken account of the views and experience of those affected by the choices; (b) ensure everyone with an interest in a decision has the opportunity to express their view and know their interests have been taken into account; give good feedback to the public on the reasons why decisions have been taken, why choices have been made and why other options have been rejected; provide good basic standards so that the public develops confidence in the process. To do this, standards must be accepted and used by both Executive and non-Executive areas of government." The conclusion is that that will create a stronger sense of citizenship. I would suggest, Sir, that this particular piece of legislation has failed miserably on most of those counts. In amending Article 94, Sir, I am seeking not to have an inclusion but an exclusion. The Economic Development Minister, who unfortunately is not here, made reference in the States on 13th March 2007 and he later supplied a background paper and made a statement. In that statement, he made reference to, subject to States approval, the introduction of Goods and Services Tax. The language he used in there was: "The Minister for Treasury and Resources and I have carefully considered the question of how G.S.T. should be charged by traders on the goods they sell to consumers." He went on to say: "We are particularly keen to ensure", we being the 2 Ministers, and he also said: "The Minister for Treasury and Resources and I are concerned that .." and he concluded by saying: "It is equally important to ensure that traders and consumers have certainty on the issue ahead of the implementation of Goods and Services Tax." That, Sir, is clear to me who is making the decision. We did hear Members say yesterday, of course, this is not the place to debate this; we have already decided. My fear is that this would then become: "We have already agreed this." When the Regulations come, the principle has been agreed, I am sorry but it is too late. I have known that happen many, many times before. That was a real concern that I had. What my alternative seeks to do is, in the first part, it says: "Require that advertisements, labels, receipts and other things that include expressions or indications of retail prices for goods and services supplied shall make separate mention of and prominently display the amount of the price that consists of G.S.T." An example of that would be that a shop or supplier could say prominently that all prices on these premises are not inclusive of G.S.T. and the present rate is X per cent, because it will change. So this is not a one-off exercise; it is a cost that will have to be borne in the future by people out there at the sharp end that somebody, I would suggest, is going to have to pay for. It is important, I think, and I stress at this point that G.S.T. will change in the future. Other Members mentioned yesterday that there could be variations on different rates so, therefore, I believe we must make it as simple as possible. I believe what I am proposing will do that. It is a simple method of dealing with it, not just initially but also in the future. The second part of my

amendment, (2)(b), is to: "Specify the circumstances in which advertisements, labels, receipts and other things that include expressions or indications of retail prices for goods and services supplied shall specify the amount of the price that consists of G.S.T. (i) on each item; and (ii) on the cumulative value of all the goods and services supplied at the same time to a person." I think that is important because it does give an either/or clause. If a car, for example, costs £10,000, the price could say it was inclusive or it could say it was not. Therefore, it would be on each item. However, when you drill down to a range of items, then it becomes an absolute nightmare for the traders to do that, especially things that are not easily transferable with a sum of 3 per cent. I believe this would have a particular consequence which would be against consumer interests in supermarkets and small shops. I would like to give an example of how I believe that would drill down. Take a small shop scenario, and you have a small boy in there with his grandfather and he is looking at the sweets. We have all seen them; Deputy Le Hérissier got has a drawer full, we know that. [Laughter] Penny Arrow bars, Fruit Salads, Blackjacks, Flying Saucers, that sort of thing, and the little boy is having a look. The sweets are set at a level where the eyes and the hands of the little boy can see. I want Members to imagine that all these sweets are price inclusive. The little boy says to his granddad: "What is G.S.T., Granddad?" "Oh, G.S.T. is very important" says the granddad. "Is G.S.T. a good thing on my sweets, Granddad? Do I get more sweets with G.S.T?" "No, son, you get less and they cost you more." "That is not fair, Granddad" says the little boy. "That is Ministers for you, son." [Laughter] "What is a Minister, Granddad?" "Do not ask, son, do not ask." "Do Ministers eat sweets, Granddad?" "I do not know, son. I think they get free cake and biscuits." "Can I be a Minister, Granddad?" "One day, son, one day." "What is an E.C. (European Commission) Directive, Granddad? Is it good for sweets?" "Good question, son." "Where does an E.C. Directive come from, Granddad?" "Good question, son." "Do we need an E.C. Directive on sweets, Granddad?" "I do not know, son." "What is a price marking Order, Granddad? Is that good for sweets? Can I lick it? Is it edible?" "Good question, son." "Do we need a price marking Order, Granddad?" "I do not know, son. Another good question." "Who does all these things, Granddad?" "Good question, son." "Why are they so interested in my sweets, Granddad?" "They are not, son, it is your money." "For my sweets, Granddad? That is not fair. What do Ministers do, Granddad?" "They charge you more for your sweets, son." "Do I get income support on my sweets, Granddad?" "That is a very good question, son." So this conversation could go on and you can see it is an educational thing because the kid knows now about G.S.T. and he has asked lots and lots of questions. How do you manage that in a small shop? It becomes a nightmare, an absolute nightmare, as indeed does rounding prices. If you look at something that costs 50 pence and you put 3 per cent on it, it does not work unless we reintroduce

the half penny. When it is rounded it becomes 52 pence, which is not 3 per cent, it is 4 per cent. What happens if we change it in the future? Do retailers go back to base and say it was 50 pence, we did that then, or do they work from where they are now? If you look at 10 items - I have used an example in there - instead of being £5.15 they become £5.20. Now, it is 5 pence but we have talked about low income and perhaps that is the area where there should not be hidden prices, there should be transparency, I would suggest. There is also the logistics of re-pricing. Many things come in with prices already on them. If this has to flow through, then it is a continuous process. It is not a one-off; it goes on for a long, long time. In fact, it goes on for ever. Just to give you some idea, the larger Jersey supermarkets would stock something like 14,000 items. In general terms they would receive about 70,000 visits a week. That is not 70,000 people; some people go more than once and some people will just nip in and get a paper and a packet of fags; other people will get a trolley load of shopping. So that is generally what we are talking about. There are some big numbers there and there would be some considerable input and there would be some serious rounding there. It is going to be a daily or weekly task to do that, and there is a cost for that and somebody would have to pay for that. That is why my amendment seeks to do that at the end of the process rather than as it goes through the system. The other thing is if the rate does change in future, I believe what I am suggesting is a simplified method to do that. I think the consequences of accepting what is in the original legislation, Sir, will be severe and will be felt for a long, long time.

The individual pricing I think is a no-no because of many examples. I could have quoted lists of stuff but I do not believe it is relevant. Members can make their own mind up about that. The Treasury Minister and also the Economic Development Minister have said: "Agree it now and then we will look at the Regulations" but I have a fear about discussing or debating it later. We heard yesterday many times: "We have already done this so do not bring this up again. This is not the debate now. We have already agreed the principle" when some of us, in fact, had not. So that is why this amendment is before the House today. I think the statement of the Economic Development Minister demonstrates that. I think it is important that we agree the principle now, which is a pricing which allows either/or. It is common sense. I think it will limit the inflationary effect and it is a sensible yardstick. It is a method that we can rely on and we can use in the future. In the main report itself, just to give a flavour, I think, of that, there are various comments to the various parts and articles. At page 10 under the description of "Part 18 Miscellaneous" what it says there is: "The States may make Regulations under Article 94 about the display and other disclosure of prices and G.S.T. including requiring G.S.T. not to be separately disclosed." That to me is not discretionary; it is there. I believe if we agree as proposed by the Minister then our hands will be tied with the Regulations. I believe it will come back and what will be said is: "We have already agreed this. The consultation period is over." I think it is common sense. It allows that flexibility for the House to accept my amendment. I think in general terms quite a number of people have contacted me by phone, by email, in the street or whatever. There has been general support and I would thank all those people for that. I think those are the people that count and with this it is a case of damage limitation. I hope Members will support the amendment and I so propose. Thank you, Sir.

The Bailiff :

Is the amendment seconded? [Seconded] Senator Le Sueur ?

2. Senator T.A. Le Sueur :

First of all, I think I have to take issue with Deputy Breckon when he says that there has been a lack of consultation on this Law. In fact, the whole principles of the Law were set out 12 months ago for consultation and it has been widely discussed. I think the price marking issue is one of those that was really put to one side and left for another day by many consultees as one of those things which is 6 of one and half a dozen of the other, maybe. Certainly it is not, I think, any fault of the consultation process that the views of the public are divided. I think what is fair, and I think Deputy Breckon would agree with this, is that what we have to have - what consumers have to have - is certainty. We do not want some shops displaying goods with G.S.T. inclusive prices and other shops doing it a different way. We have to come down one way or the other. We were presented with an entertaining story of the boy in the sweet shop and what his views of G.S.T. might end up as. I put it to Members that that boy in the sweet shop with his whatever it would be - it used to be a penny but now it is probably a 50 pence piece - will buy his sweets and go to the checkout and present his 50 pence piece and then be told by the shopkeeper: "52 pence, please." The boy will say: "Oh, I have only got 50 pence." "Well, you will have to put something back." I think it is misleading to think that the boy will be any happier doing it that way and finding that what he sees he can buy for 50 pence is what he gets for his 50 pence. The Deputy mentioned only briefly the E.C. (European Commission) directive. I am not doing this to comply with E.C. Directives. I am proposing this in order to achieve some sort of commonsense approach similar to the rest of the world. But what really surprises me is that Deputy Breckon raises the question: "Do we need a price marking Order or price marking Regulations?" I would have thought that somebody who was so passionate about consumer protection and consumer needs, price marking legislation ought to be a fundamental part of consumer protection, and that the price marking Regulations, the Price Marking Law, is really in effect the key to this whole discussion. It is not so much a question of whether the G.S.T. Law should dictate one way or another; the G.S.T. Law should be permissive, and Article 94 was intended to be permissive. I think if we want discussion

and consultation on this specific item, that discussion and consultation should take place in the context of a Price Marking Law which the Economic Development Minister promises we will have before the summer; promises before the Regulations have even been made. If we can have that discussion then, then I believe today is not the time to make an amendment to Article 94. Price Marking Law and that consultation will give us perhaps the guidance which Deputy Breckon feels is lacking. At the present time, and given that despite what he says, it will be up to this House to approve or reject Regulations which I bring, it will also be up to this House to approve or reject proposals which the Economic Development Minister brings under the Price Marking Law. I believe that is the time for us to come to that conclusion, and at the present time this amendment should be rejected.

3. Deputy P.J.D. Ryan:

Just to really echo some of the words that the Treasury Minister said a moment ago, Sir. Our Panel on this occasion is very much supportive of the Treasury position, although not necessarily the position of the Economic Development Department. This is probably a debate, as the Minister says, that we should not be having now, because the exact way in which prices are shown, added- on to till receipts at the end of a shopping run, included in the point of sale, et cetera, all of the powers required to enable the States to prescribe by Regulations in whichever way the States chooses are already present in the Law, as already drafted. Whether or not we have a separate Price Marking Law, which has only come in very recently, there is therefore the potential to have this same debate all over again in the autumn when the Regulations come before the States. But if we are though to have that debate now, then I must simply say that I find the position of the Chamber of Commerce to be a little difficult to reconcile. The main driver after all for not having inclusive shelf edge pricing, at least for the Consumer Council, and Deputy Breckon, lies in the fear that prices will be rounded-up for low value items, adding unnecessarily to price inflation. This, of course, assumes that the level of competition among retailers will support that type of profit margin increase across the board without some of the retailers breaking ranks and rounding-down at least some items to get a price advantage over their competitors. At the same time the Chamber says the level of competition among retailers is such that the notion popularly held by the Consumer Council and others is wrong. So much so that they feel able to challenge the Consumer Council's supported, and the Economic Development Department and the Minister for Economic Development's position, on the retail strategy of encouraging and trying to attract more competition specifically in food retailing, the main area where the Consumer Council perceived there not to be enough competition, and the highest risk of price rounding-up. So, which is it? Too much competition already, so no more food retailers required; or not enough competition and a high risk of price rounding-up? These 2 esteemed bodies seem to make odd bedfellows. We do, however, appreciate that both sides of this debate have good points. Our position is slightly different to the Treasury Minister in that we think our position essentially is that it could be all things to all men in the very short term, but only in the very short term. We are saying let the market decide initially with no prescription in Regulations, and we would suggest very strongly that the Economic Development Department, the Consumer Council, and the Economic Services Scrutiny Panel should in one to 2 years after the start of G.S.T. review the situation when we believe consumers will have either gravitated to other retailers or forced their favoured retailer towards their preference for operating the tax. All parties will then be able to properly judge the issue at that point. But I must say our belief is that consumers will wish to see prices displayed inclusive of G.S.T. after the initial novelty has worn off, so in that respect we do support the Treasury and the Economic Development position - very soon, a reasonable period of time after the start. That is our

position. Thank you, Sir.

4. Senator L. Norman:

When Deputy Breckon, the consumer's champion, and the Chamber of Commerce are in unison, in agreement and at one, then alarm bells start ringing very, very loudly in my mind. I thought about this issue and the comments that the Deputy has made, and I am absolutely convinced it would be in the best interests of the consumer for the G.S.T. to be included in the shelf price and not simply added secretively afterwards at the till. Now, Deputy Breckon is probably too young to remember a thing called Resale Price Maintenance, which meant that the price of a product was fixed by the manufacturer or agent. This meant in the main that the price for every product was virtually the same whichever shop or establishment it was purchased from. Now, if that Retail Price Maintenance still applied today it would not matter too much which way the tax was charged, if it was shown on the shelf price or on the till roll, as the price would be the same more or less wherever you bought it. But the reality is that this Resale Price Maintenance was abolished decades ago. The result was price competition, and the consumer became king by being granted the option to buy on the criteria that the consumer wanted, be that on price, on service, on convenience, or whatever. It also heralded a new age of retail psychology and science. A very simple and well-recognised example of this is the 99 pence price ticket, which we see everywhere in almost every retail establishment. Now, why does this happen? It is because the consumer or the retailer believes that the consumer may well be prepared to buy a certain product at say, £4.99, but might resist if that product was priced at say, £5.15. There is a big psychological difference. Now, if G.S.T. is added at the till, the price on the shelf will still be the same. It will still be £4.99. If the consumer is tempted to buy it at £4.99, which the retailer hopes, the price will still be £5.15; that is what he will end up paying. I do not think that is fair. What will happen is that every product in every shop will be priced exactly as they are today but the consumer will pay the full 3 per cent more. On the other hand, if the tax inclusive price has to be on the shelf or the product that will give the retailer a choice, perhaps almost a dilemma, but he will have a real choice to make. He will have the choice of trying to recover all of the tax from the consumer by increasing all of his prices by 3 per cent, taking the risk that the consumers will resist his higher price and do more shopping around. On the other hand, he might continue to keep his original prices, effectively absorbing the G.S.T., in an attempt to increase his sales over his competitors and cover his additional costs through additional sales in that way. He will have to decide is £4.99 more attractive to my customers than £5.15? That will be his choice. I think we need to change our mindset a little and perhaps see G.S.T. more of a tax on the retailer than on the consumer. If we think in those terms then there is no case for adding the tax simply at the till any more than there is for adding rent, rate costs, wage costs. There is no reason why those things should be shown separately than G.S.T. In simple terms, adding the tax at the till will ensure that everything goes up by 3 per cent. No wonder the Chamber of Commerce want this. It makes life easier for them, and indeed more profitable. Inclusive prices on the shelf will make sure that much of the G.S.T. will be

absorbed by the retailers and they will pay for this by improved marketing and sales techniques. Now, I do accept that some concern has been raised about the possibility of prices being rounded- up if shelf pricing is the chosen option. Now, I have to say that anyone with a basic knowledge of retailing should know that this will not happen. It cannot happen. The retail price of any item is fixed by one factor only, and that is what the retailer expects to be able to sell that particular product for. No matter how much it has cost him; no matter what taxes are on it; no matter what his overheads are. His decision on what price he can obtain for a particular product in turn is determined by only one thing; that is what the consumer is prepared to pay. That is true for a packet of sweets, a packet of cigarettes, a packet of fish fingers, or a motor car. The price is fixed by what the consumer is prepared to pay. If consumers are prepared to pay £4.99 for a product and no more, they will only pay that, irrespective of what the retailer asks and what his overheads and what his costs are. If the retailer tries to charge more, he simply will not sell the product. I am absolutely convinced it is in the interests of the consumer, it is in the interests of keeping down inflation, that we should reject this amendment this morning. Thank you, Sir.

5. Connétable G.W. Fisher of St. Lawrence :

Before I speak I would like to ask the Attorney General for some clarification. It seems to me that - and this is not just my reading, but also a legal eye apparently has cast its eye over this and is a bit confused - it says in the original draft Law: "Those Regulations may require." It then in the amendment says: "Those Regulations may require." Therefore, it seems to me that both of these Articles, whether the original or amended are permissive, but are they restrictive? That I am not clear. I am not clear whether if we adopt this amendment or we do not, whether in fact we are dictating exactly what the Regulations will say. My reading is that we will not be, so I do not really see, if I am right, that the amendment would in fact make a lot of difference. Perhaps the Attorney General would like to comment on that point, whether in fact these Articles or the amendment are permissive rather than restrictive?

Mr. W.J. Bailhache Q.C., H.M. Attorney General: Can I have a moment on that, please?

The Bailiff : Yes.

The Connétable of St. Lawrence :

I would like to speak again afterwards, Sir, thank you.

The Bailiff :

Well, we will interrupt your speech, but for the moment, yes. Does any other Member wish to speak?

6. Deputy C.J. Scott Warr en of St. Saviour :

I would firstly ask whether the Minister or the proposer of the amendment could clarify whether there is a separate marking for G.S.T. on items in U.K. supermarkets. Sir, there is a U.K. store in Jersey; where for years a percentage was added at the till for food items. I have on occasions seen people refuse to pay this extra amount. I do share Deputy Breckon's concern about the marking-up of prices when the process of G.S.T. is added. However, I believe that customers do want to know the actual price of goods when they select them. I am also unclear whether the amendment makes any difference, Sir, so I will leave it there. Thank you.

7. Deputy J.G. Reed of St. Ouen :

I want to make a couple of short comments based on some of the comments that have been made earlier, and regarding what I would term misleading comments regarding price competition. It is very clear that this will exist well after the introduction of G.S.T. whatever method of pricing is selected as this is the nature of any business and competition within the Island. It is perhaps clear to me as a layman that the administration for the businesses would be cheaper and easier if the deduction was made at the till, rather than adding it on to each individual item, and surely that is one of the issues that will drive-up prices. In other words, if administration is increased and businesses are faced with more costs then they will be looking and seeking to pass that cost on to the consumer. This is the other issue; why are suggestions being made that prices will be absorbed? What has history shown us in the past? I believe history has shown us that in fact all prices for the most part are simply passed on to the consumer, be it in petrol, food, or any other item for that matter. Wages go up, rental costs go up, and the consumer has had to face the cost. I do believe that with G.S.T. we will see individuals seeking keener prices because we are basically going to be taking money out of their pocket. That is the point that we need to be aware of. That is the issue. That will not be changed, in all fairness, whether retail pricing is inclusive or exclusive. Thank you.

8. Senator P.F. Routier:

Members no doubt are aware that I have been in the retail business for a long time - it is just 40 years - I do not believe that it is a direct interest in this particular debate, but I hope my comments from the retail experience might be of use to Members. I am pretty sure what consumers are going

to want to really be interested in is the money that is going to come out of their pockets; out of their wallets, put on to their credit cards. So, what they are going to want to know is the whole price that they are going to be paying; not just the amount of G.S.T. which is being applied to their purchase. So that the total price, the inclusive price, will be the amount of money they will have to pay. So, that is what they really need to know; what is going out of their pockets. What consumers will be keeping an eye on before they make a purchase is how much the goods are worth. They will want to ensure that they are getting value for money. I would respectfully point out that the 3 per cent G.S.T. is perhaps the bit that does not need to be focused on. It is the 97 per cent which people are going to be paying. Now, that is the big part of the bill, is it not - the 97 per cent - and we are just focusing on this tiny amount. You have to remember that the 97 per cent is made up of the cost of the goods, the profit that the retailer feels that he is able to charge. So, what the customer wants to know is what their 100 per cent amount of money going out of their pockets is going to be, what they are going to be spending. While I think about this whole topic, it is interesting - I think Senator Norman picked up on it - the Chamber of Commerce's approach to this at the present time. They are complaining currently that we are not controlling our spending. It is interesting that the representative of the Jersey Dairy has been looking for support for milk deliveries in a bill for the States to continue spending money. I am not quite sure how that stacks up. It was just an aside really about when I thought of what the Chamber of Commerce were saying on matters, so it really does not stack up. The Deputy of St. Ouen talked about additional administration costs. There are going to be no additional administration costs. When an item comes into a retail outlet a price has got to be put on it, so there is no additional cost at any stage. They have just got to set a price for the item, so there are absolutely no additional costs in putting it on the shelf or on the item itself. The 3 per cent, which as I say is a small percentage of the whole price in comparison to the costs; we have got the wholesale price and the profit margin, as I mentioned. Of course, it is common knowledge that retailers buy goods at a price and then they decide what price to offer the goods at. I deliberately say "offer" because it is just an offer to people to buy the goods. It does not constitute a sale when you see something advertised. So, retailers decide on an offer price in many different ways. For instance, taking an item that a retailer knows will sell well at £9.99; it may have a cost price which varies quite considerably, but the retailer knows that £9.99 is a good price to sell something at. If we are to go along the lines of having the G.S.T. put on at the till, the retailer would still advertise that £9.99 price but then at the till it would become £10.30. A retailer by choice would not put a price of £10.30, because he knows that is breaking the price point which he knows it is a good price to sell at. So, I am sure Members are aware of how important price points are to all levels of trade, whether it is £9.99, £2.99, 99 pence, or £1,000, or, you know, £9,999. I mean, there are all those price points which are vital to encourage people to buy. These are not going to move at the introduction of G.S.T. They are still going to be there. It may amuse people when I have spoken about it before, but there is an art to setting a price. It is something which does take a bit of knowledge about what the market will stand, what the customers are prepared to pay for an item, and that will not move when G.S.T. comes into place. Retailers will still retain that ability, even when it does happen, because it is competition which is the most important thing in all this. Customers will still have to decide whether they are getting good value for money. A retailer is going to put it at the most attractive price to sell it at. For years we have heard of the dissatisfaction, and even yesterday we heard some of it, from Members complaining about the National Multiple Retailers who continue to charge V.A.T. prices. We are told by them that it is too difficult to reduce the price from 17.5 per cent to reflect the V.A.T. in the effective price which they have been charging. I would suggest that if this amendment is successful we would be playing right into their hands. Playing right into their hands, because they will continue to charge the U.K. equivalent price, and then at the till put 3 per cent on. That is what would