States Meeting Transcript - 11/09/2008

STATES OF JERSEY OFFICIAL REPORT

THURSDAY, 11th SEPTEMBER 2008

PUBLIC BUSINESS – resumption ...............................................................2

1. Goods and Services Tax: exemption or zero-rating for foodstuffs and domestic energy (P.103/2008) (Continued).................................................................2

Deputy F.J. Hill of St. Martin : .................................................................2

1. Senator P.F. Routier: ....................................................................2
2. Senator W. Kinnard:.....................................................................4
3. The Very Reverend R.F. Key, B.A., The Dean of Jersey:................................6
4. Deputy D.W. Mezbourian of St. Lawrence : ..............................................6
5. Deputy P.N. Troy ofSt.Brelade:........................................................7
6. Senator F.E. Cohen:......................................................................8
7. Senator M.E. Vibert :.....................................................................9
8. Connétable G.F. Butcher of St. John:...................................................10
9. Connétable M.K. Jackson of St. Brelade:...............................................10
10. Senator F.H. Walker :...................................................................11
11. Deputy G.P. Southern of St. Helier:....................................................15 Connétable K.A. Le Brun of St. Mary:........................................................15 Deputy G.P. Southern :........................................................................16
12. Deputy A. Breckon of St. Saviour:......................................................18
13. Deputy R.G. Le Hérissier of St. Saviour:...............................................19
14. Deputy A.E. Pryke of Trinity :..........................................................20
15. Deputy J.G. Reed of St. Ouen:..........................................................20
16. Senator T.J. Le Main: ..................................................................22
17. The Connétable of St. Mary:............................................................23
18. Senator P.F.C. Ozouf :..................................................................25
19. Deputy A.J.H. Maclean of St. Helier:...................................................27
20. Deputy I.J. Gorst of St. Clement:.......................................................29
21. Senator S. Syvret:......................................................................30

ADJOURNMENT PROPOSED.................................................................34 The Deputy Bailiff :...........................................................................34

ADJOURNMENT................................................................................36

The Roll was called and the Dean led the Assembly in Prayer.

PUBLIC BUSINESS – resumption

1. Goods and Services Tax: exemption or zero-rating for foodstuffs and domestic energy (P.103/2008) (Continued) The Deputy Bailiff :

Very well, we return to the debate on P.103.

Deputy F.J. Hill of St. Martin :

Could I overindulge of the House before we start, Sir, and ask possibly that we could raise the Standing Order on P.138 and that is Deputy Le Fondré's proposition and ask that we debate it today? There are a number of reasons, I think, partly because ..

The Deputy Bailiff :

Well, Deputy , is that not something to do at the end of this debate? We are in the middle of a debate on ..

The Deputy of St. Martin :

Well, I know, but it was just to give an indication so we would know that if this debate was going to be concluded we would then be able to run on to the next one and I thought maybe if we asked now rather than later on, it might have made it clearer in people's minds.

The Deputy Bailiff :

I think it is a matter to be dealt with later on. You have indicated that you will attempt to do it.

The Deputy of St. Martin : Thank you, Sir.

1. Senator P.F. Routier:

Well, we have had some debates in this House and I think this one takes the biscuit; whether it is plain or chocolate covered, I am not sure which it is. But debates in the States and politics never fails to surprise and even frustrate us, I am sure. When the R.P.I. (Retail Price Index) figures were published in the early summer, the Council of Ministers decided that we wanted to find a way to have a package or a number of ways of helping to support people who have to face the extraordinary inflation of food and fuel prices. So, we thought about how we could achieve this and with the increased revenue from the G.S.T. (Goods and Services Tax) receipts it was felt that we needed to find a way to do something. I have to say I have been really impressed by some Members who are now realising that what the Council of Ministers was saying originally was right. There has been a change of mood listening to the debate yesterday that people now, who previously were saying that what the Council of Ministers was suggesting, is no longer the appropriate thing to be doing. Of course the Council of Ministers' comments which support this proposition is one of the various options which the Council of Ministers discussed along with other options along the lines of Deputy Le Fondré's suggestions. I think the inescapable facts which I hope Members recognise is that the Council of Ministers does want to help people who are finding it difficult to meet the additional costs caused by fuel and fuel inflation. We first had to think about what Members and the community would think about spending more money - the Le Fondré option - or whether they would consider reducing the tax on food. We came to a conclusion, as you know from the comments that we have made, that having listened to the debate yesterday perhaps that conclusion we came to was wrong. So, we felt that Members were more likely to support the exemption on food rather than supporting tax benefits for middle earners and increasing benefits for those non-taxpayers. So, from what I have heard in this debate is this; not only some Ministers who have had a change of heart; it is other Members as well. So, I do not think criticising the Council of Ministers for perhaps having a different thought process now is something that they should be criticised about. We are all on a learning curve. This is the fifth time we have debated this. The public are on a learning curve. They are learning about the tax and so are we as Members. So, whichever way Members vote on this issue today, I know that whatever we do, we are all really trying to help the community to face the increases in food and fuel prices. The G.S.T. debates I think really prove the fact that it is this House that is the one who have the supremacy. There have been many, many debates and many issues that the Council of Ministers just have their way and get on and do whatever they want. Well, I think this proves the point. It is this House that are the ones who decide what happens within the Island. So, if anybody ever says to me again that the Council of Ministers just bulldoze their way through things, it is impossible. It is always the House has to have the final say. Income support has been mentioned a few times during the debate and although it is not a direct matter we are debating today, I feel that I do need to comment on just some of the issues that have been raised about the effectiveness of income support.

The Deputy Bailiff :

Well, Senator, is that necessary?

Senator P.F. Routier:

There were certainly some concerns that income support was not hitting the target during yesterday's debate, I recognise and it is just a general overview. I am not going to any detail of it, Sir, and that is why I opened up in that way because I recognised that it was something, but there have been some comments about the effectiveness of income support. But I would just like to remind Members where we have come from. We did have 14 separate benefits in the Parish system which did create disincentives for people to save and to work. Those disincentives have gone. Deputy Southern is shaking his head yet again. The disincentives have gone. There are now small incentives for people to work and to save. We are supporting 8,000 households and we are paying out £125,000 per day. When we had the previous system, including the Parish welfare, there were more appeals than there are currently under the system. So, for example, there has only been one appeal in 6 months. We have had a number of requests for second determinations, but these have been resolved and have not led to an independent appeal. As I have said before, whatever system is in place we will be faced with changing demands and challenges and we have to meet that and we will be meeting those and they will be addressed. The beauty of the income support system is that the framework is sound and can be moulded to changing needs. In fact, Members will have seen the proposition - I am moving off the direct reference to income support now - which I have lodged at the request of the Council of Ministers to increase the level of the winter fuel allowance which will effectively provide a 28 per cent increase on last year's winter fuel allowance. This will come into effect in January if Members support the proposition when it is debated next month. The Deputy of Grouville in her opening remarks commented that we were only proposing an increase of 20 per cent in the winter fuel allowance. She is of course correct, but only so far because the 20 per cent is on top of already agreed increases which, in total, will make it a 28 per cent increase. Whatever the outcome of this debate that will proceed, and I hope Members will support the proposal when it is debated. The Deputy also made a comment that she did not like the 26 page application form - this is one other reference to income support - and I would just to like make a couple of observations about that. The real experience that we are having within the department is that when we offer to sit down with people and to have a discussion face to face, which is the way which we offer people, they in turn would say: "Well, I would like to take the form home with me and discuss it and sit down and think about it and fill it in, in my own time" and that, we are finding, is the way people would really prefer; some people do want to go with that. I have to say that the suggestion that people have to fill in 26 pages is way off the mark. The majority of people fill in about 5 or 6 pages. I have not yet met an elderly person with disabilities, with children, with lots of savings, but yesterday we had quite a bit of criticism about income support, Sir, so I just felt I needed to say that. Moving on, the Constable of St. Martin challenged me to do something now and he highlighted the regulation which would enable income support to be increased. I have to say that G.S.T. was covered in the earlier part of this year. We increased income support to ensure that people who were paying G.S.T., they were covered. We also have another increase coming in, in October, which the States have already agreed which makes a total increase of 6.8 per cent. So, on top of that, there will be the significant increase in the winter fuel allowance which I hope Members will support, and the Constable mentions a few things that he would like to discuss with me, so I am very happy to do that at any stage. Deputy Scott Warr en asked whether the proposed extension to the protected payments in the income support system would still be maintained. It is certainly my desire to do that and I have spoken with the Minister for Treasury and Resources and I can confirm that the transition payments will continue to be protected until October of next year. Moving on to how I am going to vote today, I have thought about it long and hard and I believe that I should continue to go along with the Council of Ministers' comments and support the proposition that is before us today. I recognise that it is a very finely balanced decision to be making. I think we have all gone around the houses on this and I respect everybody's views on the way they wish to vote on this and I make my position clear.

2. Senator W. Kinnard:

Yesterday the proposition of Deputy Le Fondré seemed to be on a bit of a roll, but I think it is mainly because many of us had not had an opportunity to look at the detail of it because of course it was not down for debate. But having, overnight, spent some time looking at it, I think I would like to pass on a few comments for Members to consider in relation to the specific issue of its provisions, as opposed to the provisions provided in the proposition of Deputy Labey . Members yesterday seemed to think that what was being offered was something of a "free lunch", but I have to disabuse Members of that view because any change to a tax, whether it is a new tax or an existing tax, of course involves things like administrative burdens and these include the amount of work that is required to determine the liability, the frequency of payment and the levels of deductions and allowances. So, there is no "free lunch" with this alternative proposition. So, it is not just direct costs that one might be concerned about. There are costs to society that need to be considered in the wider perspective. In an alternative proposition such as the one proposed by Deputy Le Fondré there is also a lack of visibility and it is a very "blunt tool", whereas I believe that the removal or the zero rating of G.S.T. on food is open to scrutiny; it is highly visible; everybody understands exactly what the effect is as a shopper. Tax concessions are by contrast comparatively hidden from scrutiny, and there are 2 particular problems I think with tax concessions and the main one is that not everyone claims the entitlement and indeed may not even claim the full entitlement even if they are aware of their entitlement. I do not have the figures here for Jersey, but certainly for the United Kingdom we know that the average taxpayer pays an extra £155 in unnecessary tax each year as a result of failing to claim their tax credits and other benefits. We also know that it is particularly the very proud members of our community, the elderly in particular, who we know are on fixed incomes who are the ones most likely to suffer as a result of the imposition of G.S.T. and they are the ones who are often less likely to claim the entitlement to which they are deserving. So, that does cause me great concern and I do not therefore see the alternative offered by Deputy Le Fondré as fitting the bill in that respect. Tax reductions also remain in place, quite often for a long time after the case for them is either diminished or completely disappeared. I have in mind here, Sir, the length of time that mortgage interest tax relief was in place and I think there is a prime example there of a very generous tax that was probably in place for far too long in Jersey. So, the point I make there is that over time it may well be forgotten about and when it should be changed very little will be done to change it because, as I have made the point, it is a far less visible way of dealing with this issue. We also know that G.S.T. is a very strongly regressive tax. It takes a bigger share of the income of the lower and middle income families than it does from those on higher incomes and the figures are there for all to see; in fact in Deputy Le Fondré's proposition. Whereas removing G.S.T. on food would make it a much less regressive tax and would, in fact, go some way to redressing the balance and reducing the relative inequalities that we see in our community, and we do know, much research shows, that

in a time of hardship it is families who suffer disproportionately. This is a point that is important and Members ought to think about this one quite carefully because the proposition offered by Deputy Le Fondré and others that were supporting it yesterday seem to assume that all income within the family is pooled and used jointly in the family, and therefore that all will benefit from tax allowances for example. But this assumption is often implicit in people's thinking and generally is unrealistic. There has been consistent research, Sir, on this issue from the London Food Commission in 1988 up to the present day and indeed we have our own research here in Jersey from the C.R.I.S.P. (Centre for Research into Social Policy) research that was done on behalf of Social Security into the incomes and the needs of families on the Island, and one of the issues is around gender inequality and the effect that this has on families, particularly on children in families. We know that children's experience of poverty, including food poverty - and I will come on to that in a moment - is very much linked to their mother's life chances and their mother's response to that poverty. Mothers frequently - in the research it has been shown - will go without basic items such as food for themselves to shield their children from many of the harsh effects of low income. Indeed this was recognised as way back as 1945 with the introduction of the welfare state when child benefit was given directly to mothers rather than to fathers because of the concern that they had even then that income was not necessarily equally distributed within the family and that there was a need to ensure that children were properly protected from poverty. We also know that it is still the case, unfortunately, that most tax forms and most dealings with tax and handling of allowances still does tend to be the man's preserve. We do therefore have to take a view that there are occasions when perhaps the women who have the greater responsibility often for the family shopping and the care of the children may not always be aware, let alone have a share in, the allowances that might be coming back to the family. So, I think that this is an important issue because when we are talking about the removal or the zero rating of food that is the direct benefit to those that are most likely to be doing the shopping and the food preparation and the day to day care to ensure that children in families are not exposed to the dis-benefits of low income and food poverty. Those we know who are on lower incomes, do in fact spend a higher percentage of their income on food than those on higher incomes. That, we think, is well established and I think another point that is important that has not been addressed is that also the nutritional value of the typical diet also goes down as income goes down so that the poorer you are, the more proportionately you are obliged to spend on food, but the less well you eat. So, while there is an argument perhaps that could be put, that has been put, in terms of efficiency in terms of what has been proposed by Deputy Le Fondré, I do not accept that because I think there is an issue about moral values here and it seems to me that I, personally, am much more persuaded by the argument

of identifying who is responsible in the family for doing the shopping; who is responsible for doing their best to protect the family from the effects of poverty and it seems to me that it is a much more direct and much more targeted way to do that through the zero rating of food rather than through some sort of tax and benefit approach. Also, from a moral point of view it seems to me that in a situation where it is the less well-off who are having to spend proportionately more, it seems to me that those issues around G.S.T. on food in particular should be treated more leniently especially when we know that food prices are due to continue to rise at their presently highly inflated level due to global conditions. But if Members are not persuaded by any of the moral arguments then I think the realisation that this proposition of the Deputy of Grouville is likely to come back to this House again and again and again in some form or another. We heard only yesterday Senator Shenton making a commitment that if this proposition does not get through in this form he will bring it back to this House, and I am sure that there are other Members who will come back again and again and again. The concern that I have about that is one that I think those Members who think that they are able to, if you like "kick it into touch again and again" I think they need to think quite carefully about this because what we will find is that the public will want "both and ..". They will want both the tax allowances and they will want the G.S.T. off food and indeed this House then, and indeed the public because indeed it is the public money we are talking about here, will end up, I believe, paying twice through this system because the public will want and will lobby for

a "both and .." approach. So, the issue of G.S.T. in this form has not gone away, it will not go away and I think that we are in danger, if you like, of doing the "both and .." at some point in the future. So, these are a number of reasons why I believe that Members should support the Deputy of Grouville 's proposition today in preference to waiting for Deputy Le Fondré's proposition some time next week. But ultimately one of the reasons that I think Members really ought to focus on about why it is preferable to go with the Deputy of Grouville 's proposition is because the proposition of Deputy Le Fondré ultimately is not targeted at those who would benefit most in families, and I believe it would cost the public more. It is not targeted because of the issue that I talk about, about the assumption that income is equally shared among families, particularly tax allowances, which I do not believe to be the case. I believe that Deputy Le Fondré's proposition is a very blunt tool when dealing with this issue and I would much prefer that Members went with the direct and visible approach that is being proposed by the Deputy of Grouville .

3. The Very Reverend R.F. Key, B.A., The Dean of Jersey:

I will make a very short speech, if I may. We have just come back from an excellent holiday in France and I had my first experience of using satellite navigation and at night as we went along just after it had said: "Turn right down the ramp on to the N164" and I had not, it said: "Recalculating" followed by: "When you can, perform a u-turn." I performed a u-turn and my wife did not say to me: "You have had a leadership crisis. What you should have done was to go on the wrong way even if it meant we never got to our destination." I want to make a couple of very simple, ethical comments and the first is there is nothing wrong with a u-turn. If you think you are going in the wrong direction or circumstances prove you are going in the wrong direction and you do a u-turn, that is not a crisis of leadership; it can mean you are listening. Now, I say that not because I have just been appointed press officer for the Council of Ministers, but simply because it seems to me to be common sense. It is what we do with our own family lives; it is what we do when we are driving our cars and if we do not use the same common sense when we are making decisions for the wellbeing of the Island then that would be, it seems to me, a moral failure. So, there is nothing wrong with a u-turn. Secondly, I want to say that I am not commenting today on Deputy Le Fondré's proposition because that is, as I understand it, not what we are debating in this debate. But I am very struck by much of what Senator Kinnard said about the poor and the way in which money is spent in families with less disposable income, and having grown up in such a family I want to say that she is absolutely right and we need to make sure that the money is in the pocket of the person who has control over buying the family's food. But I think the greater thing I wanted to say, and I address this not to those who have done all their accountancy and are already sold on another way of doing it, because I do not have your mathematical abilities, but when we first thought of G.S.T. I did rise and say that had I been a voting Member, I would have voted then for the exemption on food not because I have the skill to do the actuarial sums, but simply because something in my gut says it is morally wrong to tax the staff of life. Now, I am sorry if that is very simplistic and you might think very theological or would I mind getting a political grip but I thought it then and I think it now. That does not mean that of course friends in this Chamber, Sir, who think differently I will think any the less of them for that, but simply to say that from my point of view, if you are wavering today then I would advise Members to go for Deputy Labey 's very straightforward proposition that whatever else you tax, whatever else we might tax in the future, put

another 5p, Sir, on my pint of real ale if you must, but do not tax food.

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

I am delighted to follow the Dean who has spoken eloquently and indeed probably far better than I will be able to when I support the Deputy of Grouville 's proposition today. I have always opposed the imposition of G.S.T., a tax on food, and again today this lady is not for turning. We have heard that the change of stance of the Council of Ministers came as a surprise to many, including some of them. In my opinion though good Government must react and here we have the Executive adopting a clear reactive strategy that notwithstanding its timing, must only be applauded. Although their collective social conscience was not pricked by a 19,000 petition against the imposition of a tax on food, their moral conscience has reacted to global market forces and its effect on the lower income strata of our society. The Dean has suggested to us today that we do not tax food - well, in fact it is of course already taxed - by supporting the Deputy 's proposition in which he has asked that we remove it, I believe that we will be collectively showing our responsibility towards the people of this Island who did not want this imposition in the first place and who could never have foreseen the implications of the world economy and its affect upon us and how it has hit our pockets so much. So, just very briefly, I have never supported this and I will in fact be supporting P.103 today and I urge other Members to do so too.

5. Deputy P.N. Troy of St. Brelade :

The Council of Ministers in their comments said that they were going to accept the Deputy of Grouville 's proposition. Well "Oh, yes, they are" or "Oh, no, they are not." Which is it going to be? It is going to be interesting to see because we have it in black and white that they accept the Deputy of Grouville 's proposition, but there is a bit of wriggling going on now especially since Deputy Le Fondré lodged his proposition. Everybody is looking at Deputy Le Fondré's proposition and some Members have not even got it in the Chamber and have not even seen it so I think it is interesting to note that and I will read from Part (a) of Deputy Le Fondré's proposition it says: "To agree that appropriate increases with a total cost equivalent to the tax revenue that would be lost to the States if foodstuffs and domestic energy were exempted or zero rated for Goods and Services Tax in accordance with U.K. Value Added Tax arrangements." So, Deputy Le Fondré's is not a sum of money just for food exemptions, it is also for fuel. So, that is added on in his report I think as £1.5 million and the Deputy of Grouville 's report is £1 million. So, his report is: "We will spend another £1 million to £1.5 million on top of the Deputy of Grouville 's proposition." Well, that is good because we are into cutting spending where we can, but I think that Members are saying with the Deputy of Grouville 's proposition we can vote against part (b) if she takes them separately and count out the dual element and just go with the food element, whereas with Deputy Le Fondré's we are doing both. So, I would like to point that out to Members and I have had a quick look at it; Deputy Le Fondré has mentioned several options in there and what I would hate for us to do as we so often do is to reject one proposition today because we have another proposition down the line and then we get to the second debate, and then we start thinking about how we are going to reject the second proposition and then we end up with nothing. So, I am really concerned that Members might end up doing that. I prefer to hand back the money that G.S.T. payers .. G.S.T. payers are going into the shops and they are paying over their monies and we told them that we would raise £45 million, and it is going to be maybe £51 million, £52 million, so we are going to have an extra

£6 or 7 million and it is coming from all G.S.T. payers. So, if we are going to give it back to them saying, "Well, we got our sums wrong" - well, I will not say maybe that there was a miscalculation. I did say for years that there would be a greater sum raised. But I think that if we are going to give it back, we could very adequately give it back to all G.S.T. payers through supporting the Deputy of Grouville 's proposition. Then Members have to consider whether the proposition that we have before us achieves what we want to do, which is give money back to those who are paying G.S.T. Now, as Assistant Minister for Social Security, if this is rejected today then I am quite happy to work with the Minister - well, it would be in the new term, so we do not know what would happen - but whoever would be Minister for Social Security would have to come forward with proposals and those might be the same as Deputy Le Fondré's; they might be different to Deputy Le Fondré; when you get down to the nuts and bolts they might not be the same outcome as might be achieved because Deputy Le Fondré's is not specific. It says: "We allocate a sum of money and then it has to be jigged around by the Minister for Treasury and Resources and the Minister for Social Security and the propositions that they feel is acceptable." Then it might come back to the House and Members might say: "Well, we do not like this. We need to change this in certain ways." So, Deputy Le Fondré's proposition is: "If this is rejected; if we get a new Minister for Treasury and Resources and if we get a new Minister for Social Security what are they going to do with the way that all that money is split?" But the elements of Deputy Le Fondré is, once it is debated the sum of money is allocated, but the way in which it is allocated thereafter is not defined.

Deputy J.A.N. Le Fondré of St. Lawrence :

Would the Deputy give way a second? If there is any clarification, my understanding of the situation is that it could all be decided by this Assembly before our last sitting.

Deputy P.N. Troy :

So, Deputy Le Fondré is saying that the Minister for Treasury and Resources would come forward with proposals by the end of these sittings in conjunction with the Minister for Social Security?

Deputy J.A.N. Le Fondré:

I spoke to the Social Security Department and they said with the right will it could be done and in place before Christmas.

Deputy P.N. Troy :

Well, that is excellent, but my point is, is whether when we get to that situation - what I would hate is for us today to reject one proposition and move to another proposition - and if that did not come out in the right manner at the end of the day there would be some very disappointed people around. I feel that I have no objection at all to the Deputy 's proposition and I am going to support it. I want to see something going back to those who are paying G.S.T. We have taken more from them than we said that we would effectively and I am quite happy to give something back to the community.

6. Senator F.E. Cohen:

I came to the principle of G.S.T. with a very simple concept that I supported the low rate across the board with one proviso that prescribed medical services and equipment were exempt and the Minister for Treasury and Resources agreed to exempt medical services and goods and I was satisfied. But the world has changed since then and Islanders' circumstances have fundamentally changed. Let us remember that G.S.T. was designed to deliver £45 million; a specific tax designed to deliver a specific sum. It was decided that the best way to do that was to have a low flat rate with no exemptions; perfectly fair under the circumstances. But 2 things have changed. One is that G.S.T. is now projected to raise £50 million and my feeling is it may raise more than that, and secondly that food and fuel prices have gone up by huge percentages. The result is that very many Island families are  finding balancing their  budgets  much harder than they or  indeed we ever expected. Middle income families who represent the large body are finding life really hard. They have to cope with very high university fees; they have to cope with significantly rising mortgage payments, if they can get their mortgage renewed, and now they have to cope with unexpected food and fuel price increases. As a States Assembly we have a moral obligation to respond. You can call it a u-turn. I am not embarrassed by a u-turn. If circumstances change, I will u-turn and I will u-turn again and I will u-turn again, and I was going to use the analogy of the satellite navigation system. So, I am disappointed the Dean beat me to it. Really, we must respond to changing circumstances. As far as targeting benefits is concerned, very nice, very precise, very accounting, but governments have a notoriously awful record of targeting accurately. They always leave people out because targeting is always based on some sort of averaging assumption. Removing G.S.T. on food will help everyone. It will help low income families; it will help middle income families and yes, unfortunately, it will help high income families as well. But it will prevent any families from having to apply for assistance and we know the effect that that has, which will be the result of targeting, however cleverly you construct it. I have made it very clear that I would have preferred a healthy food exemption model. I thought that was an opportunity to adjust our population's diet in a favourable way that could have potentially huge impacts over the years on the health of our society, but that was not to be. I would have preferred to have an exemption that exempted all foods, but we are now left with a proposition that will exempt foods based on the U.K. V.A.T. (Value Added Tax) model and while, as I have said, I would prefer others, I now enthusiastically support the Deputy of Grouville 's proposition and I urge other Members to do the same.

7. Senator M.E. Vibert :

I am sorry it appears to be a procession of Ministers, but I believe Members and the public would expect, and I believe it is right, Ministers and members of the Council of Ministers should share in this debate and express their views and can I say, Sir, I found this a most difficult issue to come to a decision on and a most difficult debate. What I believe is a most important thing is that we need to do something to react to changed circumstances, and though it has been a longish debate I would like to thank all those who have spoken so far because I have been influenced by the debate. There would be no point in our debating if everyone just came in with totally closed minds and just always voted in line with their preconceived conclusion. There would be no point in having a debate. We might just as well simply vote. It would certainly make for shorter State sittings, but perhaps not for best government. In this debate my heart and my head have been in conflict. Logic dictates that we should keep G.S.T. as simple as possible and that the best way to help the less well off is to target support. While my heart struggles to how to react to the increasing food prices to make sure everyone who has been hit by this is helped in some way, so that so-called middle Jersey and everybody else do not miss out. I think no matter how good a package is offered, it would be unrealistic to think no one would miss out. There are arguments both for and against and I am grateful for the email from Deputy Ryan who is unfortunately too unwell to be with us, who chaired the Scrutiny group to look into G.S.T. and in his email Deputy Ryan rehearses some of the arguments, and I hope you do not mind if I quote briefly from it so that his views can be heard in absentia. Deputy Ryan in his email says: "The crux of the arguments against agreeing the exemption is it favours the rich more than the poor" and he accepts it does to a certain extent, though not perhaps to the extent that many of the antis argue it. One of his conclusions is: "It is perverse not to help large numbers of really needy people just in case you happen to also help a few rich ones along the way as well. There are many other ways to tax the rich more if that is felt necessary." Another argument against he refers to is: "It is costly in terms of administration; the business" and as he points out: "There are a very small number of businesses that retail food in Jersey and an even much smaller number of contact points from a G.S.T. control perspective." So, he accepts there will be some costs, and again he thinks it is overstated. The cost to Government; again he does not believe that it will be as costly as thought because he says that to think that a retailer - and there are no local manufacturers of note - no matter how big, locally, would find it commercially sensible to attack a States of Jersey ruling on G.S.T. in the Royal Court, bearing in mind local legal costs as well as a market side is just laughable. In other words, he is saying because we would be adopting the U.K. decisions it is unlikely we would be challenged in our local courts. Finally, he addresses, he says: "You can do the same job easier by increasing budgeting and expanding the benefits sector" basically Deputy Le Fondré's package, and the straight answer, he

says, "Yes, you can." But he says: "That is not what anyone with any moral fibre could advocate. The argument by extension of taking to its logical conclusion is that you would have 2 classes of people in Jersey; the taxpayers and the benefit drawers, perhaps to include pensioners; is that what we want as a society?" I thought it was important as the Deputy was not with us, but he bothered to email his views to all States Members that at least they got some airing, and I think it comes down to a question of how best to react to changed circumstances and I wish, as a member of the Council of Ministers, I had had Deputy Le Fondré's proposed support package before us when we discussed how we should react to the Deputy of Grouville 's amendment to exempt basic food from G.S.T. But we did not have it and the Council of Ministers made its supporting comments in its absence. I was well aware and it has been borne out, particularly by the speeches yesterday, that whatever the Council of Ministers did we would be damned; damned if we supported the food exemption, damned if we did not. To put it bluntly, it was Council of Ministers "bashing" time. Well, we have been bashed and as the bashing has gone on, I have swayed one way and the other as I have listened to the various arguments. Unlike some who seem to have total convictions, I do not believe it is so

clear-cut.  I believe it is a finally balanced decision. How best to help alleviate the unprecedented recent rising foods prices; is it by exempting basis food from G.S.T. or by targeting support? I finally decided by searching my conscience yesterday evening and mostly through the night as well and seeing where I believe the balance comes down in the best interest of all Islanders, and the Island as a whole. It was not for me a clear-cut, dogmatic decision of principle, but more of what is best for Jersey, as I say, in changed circumstances. The aim is the same, whether we support exempting basic food from G.S.T. or support Deputy Le Fondré's package of measures. It is how best to help our Islanders at this time of rising food prices. I do not believe introducing exemptions will be as bad as some would make out, but I accept it has its dangers and one of them, as I see, is making it easier for future States to put G.S.T. up in the future. But for me an important fact in deciding where the balance came down in the best interests of the Island, is the acceptance that many Islanders just do not accept there should be G.S.T. on food. I think it is important that as many Islanders as possible accept what the Government decides. I do not believe we have been able to convince a large number of people that G.S.T. should be retained on food in the wake of the unprecedented inflation rise in this area, no matter what alternative package is offered. I do not wish to see Jersey society any more divided than it already is.  I would like to see those divisions mitigated. I will not try to guesstimate the public's balance of views, but I believe it is clear a significant number of people just do not accept that G.S.T. should be applied to basic food. I believe it is Government's duty to consider and take heed of the views of all and exempting G.S.T. from basic food may go some way to convince many that we do listen, we do react to changing circumstances and help us to have a more cohesive society and, on balance, I believe that is a price worth paying. I believe that it is with great consideration of the facts that I have ended up with the same satellite navigation system as the Dean.

Deputy J.A.N. Le Fondré:

May I seek - I am not sure how to do it - a point of clarification from either the last speaker or perhaps the Chief Minister can consider it when he speaks and a number of the Ministers have talked about widening the number of people on benefits effectively and the question, Sir, I would like to address ..

The Deputy Bailiff :

One moment, I am listening to Deputy Le Fondré's point of clarification.

Deputy J.A.N. Le Fondré:

The question I am asking, as a point of clarification, is could they answer how they square that with the proposition of the Council of Ministers to maintain the G.S.T. rebate system that is already in place?

Senator F.H. Walker :

Can I just point out that I have no wish to attack the Deputy , but it is about the fourth speech he has made on this proposition and I know you were not in the House yesterday, but I just thought you should be aware of that.

8. Connétable G.F. Butcher of St. John :

As one of the Members of this House that is not standing for election this year, I thought I would just make a few points regarding retailing. I have spent 30 years of my life in the retail industry. A retailer's job is to maximise profit. Retailers always have a price point and that point is what they can expect to get for their product and all I would say to this Assembly and the listening public, if you are naïve enough to think that 3 per cent will drop off your grocery bills tomorrow, you are naïve indeed.

9. Connétable M.K. Jackson of St. Brelade :

I have been slightly concerned in this debate that very little play seems to have been made over the longer term aspects. They are all aware of the world crisis in terms of money lending, mortgages and so on and little has been mentioned of the affect that that will have on this Island in future years. It is my view that we may be in a situation where income tax returns are much reduced. No mention has been made of that. I think it is important to keep this G.S.T. tool as it is at present in the Minister for Treasury and Resources' pocket. By that, I mean that the present rate of 3 per cent, I consider to be sacrosanct. By approving this proposition I think that is put at risk and I am minded to vote against the proposition. I, in common with Deputy Ryan who is unfortunately not here today, was on the G.S.T. sub-panel together with 2 of my fellow Connétable s. All the detail of G.S.T. is well rehearsed in my mind. The fact that the lower income quintiles are well supported, I am perfectly satisfied with. I was also interested to speak with a manager of a local, large, retail food outlet in St. Brelade only the other day and he made the point just as my colleague has done next to me that 3 per cent is just not simply going to come off. He pointed out to me that their biggest cost was transport and fuel surcharges and if those were to be addressed, food would be an awful lot cheaper. So, there is no doubt that it is a natural reaction to be against any taxation; human nature dictates that. But having decided some 6 months ago to put this tax in place, we must let it run so that we can make a proper, sensible balanced decision and not succumb to short term populace pressures in this election year.

10. Senator F.H. Walker :

The Council of Ministers have been accused of a lack of conviction, a lack of leadership, an embarrassing u-turn and electioneering. I think we were also accused of setting up an experiment yesterday which could have brought the end to the world. In fact the world has not ended. The world has not ended and the world has not ended politically in Jersey either. If Members want to believe that this is an embarrassing u-turn and it is electioneering; that it is a lack of leadership or whatever, that is okay. I can appreciate where they are coming from. I understand that reaction to our support for the Deputy of Grouville 's proposal on food. If some Members - and there is no doubt this does apply to a number of Members - I have been delighted at the opportunity as Senator Vibert said "to kick" the Council of Ministers prior to the election; well, that is fine as well. We are quite accustomed to that and we can live with that and I am glad that Deputy Southern is acknowledging what I have said. I understand that as well. But what is remarkable is how much of this debate has focused on the position of the Ministers rather than on the issue which is whether or not we remove G.S.T. on food. Some Members have been so intent on kicking the Council of Ministers who did not even bring this proposition, but that is another matter. We would have brought a similar proposition had the Deputy of Grouville not frankly beaten us to it. But it is remarkable how many Members have focused on the Council of Ministers rather than on the issue. I do not think that is what we should be debating. I can also understand though the anger of those whose election platform has been pulled completely from under their feet, who can now no longer stand up and say: "I am standing on a platform of removing G.S.T. on food." Sorry, my sympathy is entirely limited. The issues go far beyond electioneering. Let there be no doubt at all that the Council of Ministers' support for the food element of the Deputy of Grouville 's proposition was only given because of our absolute conviction that because of changed circumstances something had to be done to protect those people of Jersey, particularly those on lower and middle incomes, against the ravages of unprecedented price increases; unprecedented price increases. Sir, I will just make one final point about electioneering. We are told in the same speech by the Deputy of St. John and one or 2 others that this is electioneering. On the other hand it is bond with the public. But it cannot do both. Let us wait and see who will now stand up, who will vote against this proposition, who will then proudly stand up at the elections and say: "I voted against removing G.S.T. on food even though you are paying 13 per cent more for it now than you were a year ago and I voted against a package of measures on fuel even though you are paying 26 per cent more for it now than you were a year ago."  I look forward with interest to see how that goes. Members have quite rightly pointed out how strongly the Council of Ministers fought off I think it was in 4 debates the exemption or zero rating of food in the original G.S.T. package. We did. No 2 ways about it, we did. Knowing that we would get flak flying straight at us for u-turns, a lack of conviction or whatever, why on earth did we come forward and support the Deputy of Grouville 's proposition? There has to be a darn good reason. Some Members may disagree but I do not think we are entirely stupid. We were well aware of the flak that the support for this proposition would attract and yet we went ahead with it because after agonising debate - and as Senator Vibert has said a heck of a lot of heart searching and soul searching - we decided it was an appropriate reaction to a total change in the circumstances of everyone who shops and everyone who lives in Jersey. Things have changed. Those who suggest like Senator Perchard that nothing has changed are completely out of touch with what is going on in Jersey and indeed anywhere else. [Approbation] Things have changed and a reaction is absolutely essential; not desirable but essential. Anyone who argued that nothing has changed will not only vote against this proposition but vote against Deputy Le Fondré's proposition as well because if nothing has changed, why change anything? So I am afraid Senator Perchard and one or 2 others cannot exactly have it both ways. I mention Deputy Le Fondré's proposition. I will come back to that somewhat later. Sir, Senator Perchard said this is the fifth debate we have had on this issue. He is right but it is the first debate we have had since these circumstances changed and since prices rocketed. Although some obviously would like to pretend that it has not made any difference, the fact is that people of Jersey in common with people in many other places in the world - but our focus obviously is on the people of Jersey - are suffering and suffering badly because of these - I say it again - unprecedented rocketing in prices. They are rightly looking to their Government, the States of Jersey, to come to their rescue and do something about it. Exactly what the Council of Ministers is doing in supporting this part - the food part - of the Deputy of Grouville 's proposition on G.S.T. and exactly what the Council of Ministers are doing in coming forward with a directly targeted package to help those who are suffering from huge increases in their fuel costs. We are coming to the rescue. The Deputy of Grouville is coming to the rescue and we are coming to the rescue of those members of the public who simply cannot afford the off the scale increases in their basic essentials. If that is a lack of leadership, okay, I am more than happy to be accused of a lack of leadership in that context. More than happy. In no way, despite the suggestion of the ace reporter of the J.E.P. (Jersey Evening Post), in no way do I consider this to be an embarrassing u-turn. A u-turn it may be but I think the Dean put that brilliantly into perspective. Circumstances changed. We adopted and adapted our policies to meet

that change. Embarrassing? Not in the slightest. I am proud of it because it shows that we will not stick to political dogma. We will not stick to policies in the light of tremendous change. We are prepared to adapt. We are prepared to be flexible to help people who we now know are suffering far more than they were a year or more ago. Anyone who suggests that the Council of Ministers have gone spineless should perhaps stop to reflect on our record because we have never been afraid to stand up for what we believe in. We have never been afraid where it is necessary in our view in the best interest long term of Jersey people to court unpopularity. We have stuck to our guns. We have not gone belly up on this. We have come forward with a totally genuine reaction which we genuinely believe has to be done. It is interesting. If we had ignored the increase in price, if we had opposed the Deputy of Grouville 's proposition, then we would have been accused of a lack of caring, of ignoring the hardship that people are suffering in Jersey. There they go again, the Council of Ministers not in touch; just continuing with their own political agenda. I would dare to say that if we had supported Deputy Le Fondré probably many speeches that we have heard yesterday and this morning in favour of his proposition would have been exactly the opposite. They would have been opposed to it. But I guess that is politics. I even understand that we have been accused of a conspiracy theory. That apparently we are supporting the Deputy of Grouville 's proposition knowing that that would create opposition in a sort of underhand way to ensure that Deputy Le Fondré's proposition wins. I wish we were that devious. I really, really wish we were that clever. But I commend the people who have such an unbelievable mind who can come up with such a conspiracy theory. It says far more about them than it does about the rest of us. Sir, the second reason we are able to support and do support the removal of the G.S.T. - the zero-rating of G.S.T. - on food is because G.S.T. despite the critics, despite the knockers, has been a success. It has not brought about the end of the world as so many people predicted it would when it came in. In fact it has come in very smoothly, very quietly and though no doubt still generally unpopular - people would far sooner not have it; so would I - but, nevertheless, it has been a success. It has been a success also to the extent that we now expect to generate more money from it. Deputy Troy has been forecasting this, to his credit, from day one. We now expect to generate more income from it than we did in the first place. We have always said that we would only tax people to the extent we needed it and here in the light of these very adverse circumstances and situation we have an opportunity to give the extra back. We have been criticised for supporting a proposition which would cost £300,000 but this is public money. It is the public's money. I would have thought that most people would have thought an investment of £300,000 to give them back £4 million was not a bad investment. I wish I could do that more often with my investments than I certainly can at the moment. It is a good investment for the public. It gives them back what we believe in these circumstances they are entitled to. It does nothing - nothing - to attack the 3 per cent rate. Those who have suggested that this will mean the 3 per cent rate will change are off beam. This is additional money. The 3 per cent rate was guaranteed to stay in place on the back or on the prospect of £45 million income receipts. We now know it is going to be £50 million or thereabouts so we can afford to give it back without putting the 3 per cent at risk. That is a scare story which does not hold water. The other suggestion that I heard this morning in one of the speeches was that food prices would not come down by 3 per cent if G.S.T. is zero-rated. I do know, and we heard earlier, we do know that the Co-op will reduce their prices by 3 per cent and I would suggest if they do, there is no way that the other major retailers will not follow suit because they just would not be able to stand the market forces. That will force other retailers to follow suit as well and the 3 per cent I have no doubt will come off. It has also been suggested that by adopting this u-turn or whatever it is, we could be seeing the end of G.S.T. as we know it or that we are moving over to a complete U.K. (United Kingdom) system. What nonsense. This is no way the end of G.S.T. and this is no way a move to the U.K. system - well, it is on food - but it certainly is not. The House rejected yesterday Senator Norman's contradictory attempt to first of all say we should not be moving to the U.K. system on food and then propose that we should move to it on just about everything else. The House rejected that. We are not going down that route. This is, I repeat, an appropriate reaction to totally changed circumstances. So far as fuel is concerned, Members have 4 choices. They either go with the Deputy of Grouville , they accept the Council of Ministers' amendment or they reject them both and go with Deputy Le Fondré's proposition or - and I hope nobody is seriously considering this - they do nothing. I do agree again with Deputy Troy to reject this proposition today and then reject Deputy Le Fondré's proposition next week would be disastrous because we would send out the message then - and I fear for anyone standing for election on that basis - that we are doing nothing in response to what is going on in the Island at the moment. The Council of Ministers have brought forward amendments to the Deputy of Grouville 's

proposition which we believe are more precisely targeted and they are part of an overall package of initiatives which will directly meet the needs of those people who are suffering from greatly increased heating bills. There is a difference between food and fuel. People have to eat to live. They do not necessarily have to heat their houses. We all know of circumstances where people cannot afford to heat their houses or are cutting back on heating or whatever. We believe that the Council of Ministers' amendment is more precisely targeted at those people so it will enable them - give them the support they need - to meet their fuel bill commitments. The Council of Ministers has a complete package which is aimed at supporting the less well off, both in food and fuel and in other ways. The package includes freezing fuel excise duty, increasing income support to cover food and fuel inflation, increasing the winter fuel allowance by 28 per cent, deferring until October 2009 - a full year later than originally accepted by this House - any reductions in income support for households on transitional relief, allocating £1 million more for home insulation grants and energy efficiency advise, improving the bus service and capping bus fares, and accelerating the programme for insulation on States social rented housing. Add to that what we have already done

as approved by this House, which is the extra up-rating of income support by 3 per cent to cover G.S.T. in the first place, an increase in the winter fuel allowance by an extra 3 per cent to cover G.S.T. on fuel, interim G.S.T. grant to cover cost of G.S.T. on food for those who do not pay tax or receive benefits, an increase in the income tax exemption limits by 6.5 per cent and a 20 per cent increase in income tax child allowance. The Council of Ministers has a total, comprehensive package - some of which is approved, some of which is yet to come forward - all aimed at protecting the less well off in our community. We believe that part of our package which we are proposing as an amendment to the Deputy of Grouville 's proposition today is a more appropriate way forward to protect people against their fuel bills than her proposition but Members obviously have a choice. Can I finally turn to Deputy Le Fondré's proposition? Can I say - and I know my views are shared by a number of Members - I think it is a great shame that because of procedures - and we do need procedures, we do need rules obviously - we are prevented from debating Deputy Le Fondré's proposition at the same time as we are the Deputy of Grouville 's proposition because in many speeches yesterday Deputy Le Fondré's proposition dominated Member's thoughts. It is a shame that the 2 debates have to take place a week apart. I wonder whether we cannot be more flexible at some point in the future if these circumstances arise again. I congratulate Deputy Le Fondré on coming forward with a proposition which does represent - there are no 2 ways about it - a genuine alternative to the proposals of the Deputy of Grouville and those proposals as amended by the Council of Ministers. What it does is give the House a choice. I very much hope the House has rejected the option of doing nothing and I very much hope that the House will decide that something has to be done. Deputy Le Fondré has given the House a choice. That is fine. That is democracy in action. I make no criticism of him for doing that because it is a genuine choice. Whichever way Members vote, they will be showing that they do wish to respond to the situation that is badly affecting everyone in Jersey. Either way in my view the House will be showing leadership and its ability to act proactively and quickly. But having said that, Deputy Le Fondré's proposition is not a panacea as some would have us believe. It does not answer all the ills. It does not answer all the questions that are being posed by current circumstances. Unlike the removal of G.S.T. on food, there is no way that it can be argued that it is going to help everybody because there are people who it will not necessarily help. Senator Shenton was quite right when he said that the effect of it will be - and people's opinions on the desirability or not of this will differ - it will encourage more people or will drive more people into income support. Now Members may think that is okay. Members may think, as many do, that that is not good; that that is bad. I reiterate the words of Senator Kinnard, I believe that the Deputy of Grouville 's proposition as supported by the Council of Ministers is a more direct and, in these circumstances, a more appropriate and will be much better appreciated result, outcome, answer to what is currently going on. But I do accept it is finely balanced. It is very clear from, for example, Deputy de Faye's speech yesterday that the Council of Ministers is not united on this. That is fine. That again is democracy. I have never insisted, contrary to the belief of some, that the Council of Ministers has to be unanimous on everything. You may hear other speeches from Ministers which support Deputy Le Fondré's proposition. There is no problem with that and there is no dictatorship, but I wonder what they will be doing for a job next week. But the fact is, come what may, Ministers are entitled to take a choice. It completely debunks the myth that there is a dictatorship here and we make decisions behind closed doors because this choice is freely made on the floor of this House, which is exactly where all major decisions should be made, indeed have to be made and always are made. But the important thing is the Council of Ministers are totally united that something has to be done. Doing nothing is not an option. I will wholeheartedly support the Deputy of Grouville . I believe her proposition is the most appropriate, is the most direct and is the proposition that would have the most impact and most beneficial impact on the people of Jersey. But, Sir, Members do have a choice but I hope they will not make that choice believing that Deputy Le Fondré's proposition although entirely valid, as I have said, is indeed a panacea and answers all the questions because it does not. The Deputy of Grouville 's proposition in my view is, as I have already said, more

appropriate and I will give it and continue to give it my full support.

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

Could I ask the Chief Minister a point of clarification regarding domestic energy; the sudden alternative package compared with the package of sudden measures? As the Council of Ministers is about to come to an end, is there any way the Council of Ministers can give a guarantee that all these measures which obviously some are not in at place at the moment .. is there any way that, for instance, the one about the buses and freezing the bus fares, will they be able to be put in place, were part 2 rejected, during the lifetime of this Council of Ministers by the end of the year?

Senator F.H. Walker :

That will depend on the House. I did make it clear I hope that it was an overall package of measures and in part that will depend on the outcome of the V.E.D. (Vehicle Emissions Duty) debate. But certainly if the Deputy of Grouville 's proposition on fuel is successful then Ministers would need to look again at the overall package. I cannot say any part of it would completely fall. I cannot say it necessarily will all be guaranteed to succeed. But we would have to look again at whether or not all the elements of the package that we have put forward and/or wish to put forward will still be possible.

The Deputy Bailiff (in the Chair):

I think the question was the other way round, was it not?

Deputy C.J. Scott Warr en:

I was asking the fact if the domestic energy provision failed, would the package be able to be put in place by this Assembly?

Senator F.H. Walker :

Sorry, Sir, I misunderstood. In which case if the House approves further propositions from the Council of Ministers and in particular the V.E.D., yes.

11. Deputy G.P. Southern of St. Helier :

It is indeed a pleasure to speak after the Chief Minister and for once wholeheartedly support his position. [Approbation] We have already heard from the Dean today but I will just give a quick hallelujah, hallelujah, the Council of Ministers have finally seen the light. I have been arguing for the past 5 years that G.S.T. [Interruption] (a) is regressive; and (b) is bureaucratic; and (c) is the wrong way to go and supporting exemptions time and time again because of the regressive nature of the tax. I still believe it is the wrong tax for Jersey but, having said that, to tax food is the worst step of all. I want to just put that into context. Is G.S.T. a tax on the poor? Of course it is, and we will demonstrate that later. In particular, yesterday we had a very confused debate where people were making assertions and proposing alternatives in a very confused way. They were perhaps highlighted by the speech of Deputy de Faye. I am afraid yesterday Deputy de Faye proved his lack of understanding of basic economics when he rubbished the issue that G.S.T. is regressive. It is widely held with economists as well as lawyers if you get more than one of them in the room, if you get 17 in the room and ask for an opinion you will get 17 different opinions. Or 18, yes, thank you, that is the joke. If you were to ask 17 economists in the room is G.S.T. regressive, universally they would say, yes, absolutely. Then ask them is G.S.T. on food in particular regressive and again they will be undoubtedly unanimous in saying absolutely. How much can one person eat? Rich or poor, how much do you spend? How much can you eat? So on food - the basic essentials - even more regressive. I will just demonstrate that with the figures that we have for our own G.S.T. tax. Finally, I do want to address, because Senator Walker left it open and said there was a realistic choice between today's proposition and possibly one next week, and I do want to address some of the issue that are contained in Deputy Le Fondré's proposal because I promised him yesterday that I would read it thoroughly and come back with a response. I expect that he is waiting for it.

Connétable K.A. Le Brun of St. Mary :

Could I kindly interrupt you if I may and ask to speak because I have not read Deputy Le Fondré's one because, as far as I am concerned, that is for next week. I am rather disappointed you were not stronger in the Chair this morning when everybody was looking and they had the opportunity. All the speakers that spoke yesterday had no opportunity at all to refer to Deputy Le Fondré's one in that respect. I do not feel that we are discussing Deputy Le Fondré's projet today and yet there is a lot of reference being made to it. There are a lot of people who have not referred to it because I am of the opinion that is for next week's debate and not this week's.

Senator S. Syvret:

A point of order. In fact a variety of speeches since this debate began have dealt extensively with Deputy Le Fondré's proposition because it is germane to this debate. Indeed the Deputy himself made a lengthy speech about it. So the genie is out of the bottle as far as that is concerned.

The Deputy Bailiff :

In my judgment it is in order to refer in general terms to Deputy Le Fondré's debate. Clearly Members are entitled when deciding how they are going to vote on this matter to take into account an alternative which has been mentioned. The level of detail I think has to be controlled but a general discussion of alternatives is clearly a material factor so I see nothing improper. Deputy Southern , you were on your feet.

Deputy G.P. Southern :

The first point I was going to make was that we should not be considering the alternative. It is not here today. We should be voting on what is here today with or without the support of the Council of Ministers and dealing with this issue in what I believe is the best way to deal with it. The bringing of a proposition of an alternative is a tactic that is often used in the House and basically it is about delay; do not decide today, we have something coming along later. It is always a mistake to trust that sort of mechanism. We have to deal with this issue today and we have to vote on it in the light of its merits. The problem for the Council of Ministers, and for many people in the House I believe, which resulted in yesterday's feelings being expressed, was down to the way in which G.S.T. has been presented by the Minister for Treasury and Resources in particular, but the Council of Ministers in general. It has been presented with a lot of spin and a lot of absolutes all the way through. "It is the only way forward" was the first bit of spin. "We have examined all the alternatives and this is the least bad alternative", second piece of spin. Simply not true. But nonetheless Members were persuaded. Then we were told - and this is a big one and I have held the Minister for Treasury and Resources to account for this – "G.S.T. is only slightly regressive if you measure it against spending". Actually if you measure it against spending it is proportional. It is identical. Its effect is the same whether it is .. however, no economist in the entire world would say that is the way to measure regressivity. It must be measured against income. If you do that the figures are very, very clear. Given our income distribution as we currently understand it, operate it since it was first established in 2002, we get a ratio of G.S.T. per household in the quintiles. In the bottom quintile a simple ratio of 1:43. It does not matter what that is. That is weekly income. G.S.T. spend over the year against weekly income: 1:43. Go to the top - the wealthiest quintile - that goes down to 0.76 so a ratio of 2 to one. The impact of G.S.T. is twice as proportionate on the lowest quintile as on the highest. That is clear; clear regression. The middle quintiles all about the same sort of proportion; around a figure one. So it is regressive. Then we look at the proportion - very simple household expenditure survey - of spend that goes on food. It is table 2.4. It is not hard to find. Food and non alcoholic drinks in the lowest quintile 14 per cent spent on the basic foodstuffs and drinks. In the highest quintile, albeit that it is more in absolute terms, percentage- wise amount proportion of your  income spent on food 7.6 per cent. Again regression. The proportion spent on food is most in the poorest household and least in the wealthiest household on the principle that however expensive your food, how much can you eat? You simply cannot spend that much more on food because all wealthy people are not enormously round and fat. It does not

happen. In the simplest of terms the alternative that has been presented - and I will deal with that now or some time later - which may or may not get accepted in some sort of form which comes on the back of basically 3 pages of documents. Earlier in the week Deputy Pitman was criticised for suggesting that we move forward and take a policy - an in principle decision - to be delivered in 3 years' time to ask the P.P.C. (Privileges and Procedures Committee) to do a major move in 3 years' time. That was rejected because it was on the back of a mere 3 or 4 sides of a proper backbench proposition. Yet today or yesterday we were getting speaker after speaking saying on the basis of 3 pages and a roughed up proposition we should make major changes to our income support system and rehash it altogether. That cannot be right. That cannot be right surely when at the same time we are in debate - and it will be debated next week on the Annual Business Plan - whether the Social Security is saying we cannot possibly start mending the income support scheme until we have reviewed it and we are not intent to review it until 2010. So tomorrow or next week we should be making significant changes, amending income support when the official position is we cannot do anything until we have reviewed it properly and we know exactly how it is working in 2010. I do not think that is a case put forward at all. While the proposition of Deputy Le Fondré does have some merit and is a possibly viable alternative, the simplest and most effective way is to simply take off G.S.T. on food and it is the most effective way. Whatever the arguments that were said yesterday, that is the way to deliver. If you want to make sure that you are targeting the poorest that is there. It is regressive. It does damage the poorest most, and significantly food is the biggest element where the biggest differential in spend concentrates on the lowest. If that is what you want then not charging the tax does it. If you want to at the same time make sure that everybody who is feeling the pinch gets something then not charging the tax again hits the button. It does it. So both of those arguments which were produced time and time again yesterday as the merits of the alternative are already met in this particular project. But I can understand, as summed up perhaps most accurately by the Deputy of St. John who has just walked in, when he said - and I think I quote him accurately - do it another way but do not support this proposition. It was almost a

cry of desperation. Yes, it should be done but let us do it any other way than taking tax off food. Why was this so strongly held yesterday and why were people genuinely concerned and upset about the apparent u-turn? I will not speculate about the reasons for that at all in this Chamber. I can save it for elsewhere. Whatever the reasons for the u-turn people were rightly miffed. Why? Because of the propaganda machine that was on full and has been for the last 5 years. We were told that it was absolutely essential and vital and impossible to deliver unless we kept it single rate on everything. Time and time and time and time again. Of course that was not true. A more reasoned argument would have been we can choose exemptions, we can go down the U.K. route, we can follow a New Zealand model or whatever. There are viable alternatives, different ways of delivering, all of which can be delivered. Here are the pros and cons of each. But, no, we had the spin machine out going full blast, absolutely vital. So, surprise, surprise, when the Council of Ministers turns round and takes G.S.T. off food, which it should never have done in the first place, people are upset because they have been persuaded by the Minister for Treasury and Resources in particular that it was absolutely essential. They have gone out and talked to people and said, yes, I know it is a nasty, horrible little tax but it is the only one available and we are persuaded that we have to have a single rate because that is the only way to do it. Now people in this Chamber are saying, good grief, not only is it embarrassing for Ministers; it is embarrassing for us because we have talked to people. We have gone out there and said, "Reluctantly I have had to support it because I am told time and time again that it is the only way forward." Again yesterday we had this confusion. We are using arguments that should be used on the principle - the nasty principle of G.S.T. - on this exemption. It is the wrong target. The target for those sorts of arguments is about G.S.T. not about the exemptions. The second one is of course that the exemptions are bureaucratic. Hang on, again go back to the fundamental argument that we had 5, 4, 3 years ago. Is G.S.T. the most bureaucratically simple and administratively simple way to gather this tax? No, it is not. It never was. The simplest way to gather tax is through machinery you already have there: income tax, social security, rates or an equivalent, a land value tax. You already have that collection

mechanism there. You might have to build on it a little bit but you do not have to employ 10 new civil servants to collect it. It was never bureaucratically the best. We were persuaded though it was bureaucratically the best. But now we try and exempt something, it is a bureaucratic nightmare. It is going to cost £300,000. Hang on. Wait a minute. If you need to enforce and assess what is happening then with or without exemptions, it is the same job. It is a very similar job. The extra loading is not that great. It cannot be. You have to check reports. You have to check G.S.T. returns. You had to do that whatever system you have. If you have exemptions, yes, it is a little more complicated. It is not enormous. Just consider for a minute - again I will return to the alternative of Deputy Le Fondré's - what is administratively simpler in order to not charge £5 million worth on food? Is it easier not to charge the tax or is it easier to charge the tax and then pay it back? As Deputy Baudains said, that is an administrative nightmare. We will take it with this hand and we will do a calculation with it. Whoops, the pound I just received from you just became 75 pence and I will give you that back because I have had to employ people to mess around with it. Is it administratively simple? Yes, simply do not charge it. It was described yesterday by Deputy Le Fondré as, "Please wait for my proposition and do not go with this emotional and impulsive proposition." Emotional and impulsive, no. The facts say this is the best way to deliver the benefit we want to deliver. As for impulsive, as we keep on reminding ourselves it has been around for a long time. Exempt food, it has been there for 5 years. This is the fifth time we debated it. It is not impulsive either. The facts are clear. This is the best way to deliver the Council of Ministers' intentions and I am sure the intentions of every Member of this House to protect at this stage consumers in our Island from the worst impact of G.S.T.