States Meeting Transcript - 09/12/2010

STATES OF JERSEY OFFICIAL REPORT

THURSDAY, 9th DECEMBER 2010

PUBLIC BUSINESS – RESUMPTION..........................................................4

1. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – second amendment - approval for debate (P.157/2010. Amd.(3) Amd.(2)) ...............................................4

1. Senator F. du H. Le Gresley:.............................................................5
2. Senator B.E. Shenton:....................................................................6
3. Senator P.F.C. Ozouf :....................................................................6

2. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010. Amd.(3))..................................7

1.2.1 Deputy A.K.F. Green of St. Helier:......................................................7

3. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – amendment (P.157/2010. Amd.(3) Amd)............................................................................11

1. Senator S.C. Ferguson:.................................................................11
2. Deputy T.M. Pitman of St. Helier:......................................................11
3. Deputy P.V.F. Le Claire: ...............................................................11
4. Deputy G.P. Southern of St. Helier:....................................................12

5. Deputy J.A.N. Le Fondré of St. Lawrence : .............................................12
6. Deputy A.K.F. Green:..................................................................13
7. Deputy M. Tadier of St. Brelade:.......................................................13

8. Senator P.F.C. Ozouf :..................................................................13
9. Deputy A.E. Jeune of St. Brelade:......................................................13
10. Deputy D.J.A. Wimberley of St. Mary : ..............................................14
11. Deputy I.J. Gorst of St. Clement:....................................................14
12. Senator S.C. Ferguson:..............................................................15

4. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – second amendment (P.157/2010. Amd.(3) Amd.(2))..........................................................16

1. Senator P.F.C. Ozouf (Minister for Treasury and Resources):..........................16
2. Deputy A.K.F. Green:..................................................................16
3. The Deputy of St. Mary:................................................................17

4. Senator F. du H. Le Gresley:............................................................17
5. Deputy G.P. Southern :..................................................................18
6. Deputy R.G. Le Hérissier of St. Saviour:...............................................19
7. Deputy P.V.F. Le Claire: ...............................................................19
8. Deputy A.E. Jeune :.....................................................................21
9. Connétable K.P. Vibert of St. Ouen:....................................................21

10. Senator T.A. Le Sueur:..............................................................22
11. Deputy C.F. Labey of Grouville :....................................................22
12. Deputy T.M.Pitman:................................................................22
13. Deputy J.A.N. Le Fondré: ...........................................................23
14. Deputy M. Tadier :...................................................................23
15. Deputy J.A. Martin of St. Helier:....................................................24
16. Senator J.L. Perchard: ...............................................................25
17. Senator P.F.C. Ozouf : ...............................................................26

5. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010. Amd.(3))................................28

1. Deputy E.J. Noel of St. Lawrence:......................................................28
2. The Deputy of St. John:................................................................29
3. Deputy M. Tadier :......................................................................29
4. Deputy J.B. Fox of St. Helier:..........................................................31
5. The Deputy of Grouville :...............................................................31
6. Deputy A.E. Jeune :.....................................................................32
7. Constable L. Norman of St. Clement : ..................................................32
8. The Deputy of St. Mary:................................................................34
9. Deputy R.C. Duhamel of St. Saviour:..................................................35
10. Deputy T.M.Pitman:................................................................37
11. The Connétable of Grouville :........................................................37
12. Deputy A.E. Pryke of Trinity : .......................................................38
13. Deputy R.G. Le Hérissier:...........................................................38
14. Deputy F.J. Hill of St. Martin:.......................................................39
15. Deputy G.P. Southern : ..............................................................39

LUNCHEON ADJOURNMENT PROPOSED..................................................40 Deputy R.G. Le Hérissier:....................................................................40

Mr. H. Sharp, H.M. Solicitor General: ........................................................41 Deputy P.V.F. Le Claire: .....................................................................41 Deputy R.G. Le Hérissier:....................................................................41 Deputy J.A.N. Le Fondré:....................................................................42

LUNCHEON ADJOURNMENT................................................................42

16. Senator B.E. Shenton: ...............................................................43
17. The Solicitor General:...............................................................43
18. Senator S.C. Ferguson:..............................................................44
19. Deputy P.V.F. Le Claire:............................................................45
20. Deputy A.T. Dupre of St. Clement:..................................................47
21. Connétable D.W. Mezbourian of St. Lawrence:......................................48
22. Senator T.J. Le Main:................................................................48
23. Senator A. Breckon:.................................................................49
24. Connétable S.A. Yates of St. Martin:................................................52
25. Connétable M.K. Jackson of St. Brelade : ............................................53
26. Deputy J.A. Martin: .................................................................54
27. Connétable G.F. Butcher of St. John : ................................................55
28. Deputy J.A.N. Le Fondré: ...........................................................56
29. Senator J.L. Perchard: ...............................................................60
30. The Connétable of St. Mary : ........................................................60
31. Deputy I.J. Gorst :....................................................................61
32. Deputy T.A. Vallois of St. Saviour:..................................................63

33. Senator A.J.H. Maclean:.............................................................63
34. Deputy M.R.Higgins:...............................................................66
35. Deputy A.K.F. Green:...............................................................66

6. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010) – second amendment - paragraphs 2 and 3 (P.157/2010. Amd.(2))......70

1. Senator F. du H. Le Gresley:............................................................71
2. Deputy M. Tadier :......................................................................73
3. Senator P.F.C. Ozouf :..................................................................74
4. Deputy P.V.F. Le Claire: ...............................................................75
5. Senator A. Breckon: ....................................................................76
6. Deputy R.G. Le Hérissier: ..............................................................76
7. Senator A.J.H. Maclean:................................................................77

ADJOURNMENT................................................................................79

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

[09:36]

Deputy P.J. Rondel of St. John :

Sir, before we start the business of the day, and given the way the debates are going, is it prudent to ask the Members, if necessary, they would be willing to sit on Saturday to finish the business of the House?

The Bailiff :

That is very much a matter for P.P.C. (Privileges and Procedures Committee) to consider and then bring to Members. Chairman, do you want to just take note of that and then see what ..

Connétable J. Gallichan of St. Mary :

Yes, I will take note of that. I am sure, though, there are many Members who have arranged .. there are lots of community functions on but we will have to take that into consideration.

Deputy P.V.F. Le Claire of St. Helier :

Sir, I have a proposition down for debate today and I think the best thing for me to do, considering where we are at this stage of things, I anticipate there is going to be a very difficult appetite, if not waning support for any debate on it. So with the leave of the Assembly I will withdraw it and relodge it in the new year.

The Bailiff :

Which projet is this, Deputy ?

Deputy P.V.F. Le Claire:

It is the Financial Services P.87.

The Bailiff :

So you are agreeing to defer that, not withdraw it but defer it? Deputy P.V.F. Le Claire:

I think it is going to be time barred if I defer it so I will withdraw it and relodge, if that is appropriate.

The Bailiff :

Very well. Thank you very much, that is withdrawn.

PUBLIC BUSINESS – RESUMPTION

1. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – second amendment - approval for debate (P.157/2010. Amd.(3) Amd.(2))

The Bailiff :

Then we continue with the debate upon the budget and the next matter is the amendment in the name of Deputy Green. But if Members agree, it seems to me it would be helpful for Members to know before Deputy Green makes his proposition as to whether they are going to debate the amendment to that lodged by the Minister. As Members know, under the Public Finances Law amendments have to be lodged 14 days before, but there is an exception for the Minister, presumably to deal with the last minute things, it says: "Does not apply to an amendment moved by the Minister if the States agree that the amendment may be debated forthwith or at a time approved by the States." So, Minister, do you ask the Assembly then ..

1. Senator P.F. C. Ozouf (Minister for Treasury and Resources):

Yes, I think Members are aware that this is an amendment which I have been asked to bring for the Council of Ministers. I would ask Members leave to permit the debate to happen I am proposing it, I promise, to be brief. I think all of the arguments in relation to these issues are well understood, Members know probably how they are going to be voting in these issues, it is straightforward and I would ask Members for the permission to debate the amendment after Deputy Green has made his proposition.

The Bailiff :

Is that seconded? [Seconded] Senator A. Breckon:

Sir, could I ask of you a question of procedure? If we debate their amendment, which I believe would - if their exemptions are accepted - increase it from 5 per cent to 6 per cent, if we approve that first then where does that leave Deputy Green's amendment?

The Bailiff :

Well, of course we do have to debate any amendment to Deputy Green's amendment first so that if it is passed then what Members will be debating thereafter is whether to have exemptions with a 6 per cent rate. If, on the other hand, Members want to have exemption with a 5 per cent rate then they will vote against the Minister's amendment and then vote for Deputy Green's amendment.

Senator A. Breckon:

Would you just confirm to a simple country boy that it is not possible to increase the rate to 6 per cent and then not have the exemptions, that is not possible by what is being proposed?

The Bailiff :

No, because the amendment is clear only if there are exemptions, is it not, yes. Senator P.F.C. Ozouf :

As we went through yesterday, if the amendment is accepted but then the underlying proposition is rejected then we default back to the 5 per cent.

The Bailiff :

Yes, because the amendment itself has been rejected. Very well then, all those in favour .. the appel is called for then in relation to the proposition of the Minister that he be allowed to propose his amendment to Deputy Green's amendment. If members return to their seats.

Senator F. du H. Le Gresley:

Are we allowed any discussion on this?

The Bailiff :

Briefly, if you wish to, yes, I did not realise anyone did want to. Senator F. du H. Le Gresley:

I would like to if I may. Can I carry on?

The Bailiff :

Yes, please do.

1. Senator F. du H. Le Gresley:

I am rising to object to this late amendment, if merely to point out to Members that the 6 per cent basic rate that we could end up with has never been consulted with the general public. In the consultation exercise that went out through the F.S.R. (Fiscal Strategy Review) there was never ever a mention of a 6 per cent basic rate which will have a very bad effect on many of our industries, particularly tourism, retail. I think Members need to realise that this is very much a last effort by the Council of Ministers and I would strongly urge Members to reject it. Thank you.

2. Senator B.E. Shenton:

What we are debating here is just whether to allow the amendment to be debated, nothing to do with 6 per cent rate or anything else. I am going to vote against it because I think the ability of the Minister to bring late amendments was more to cover inaccuracies in his budget statement and I think this is an abuse of process. Also I am unhappy with the fact that a Minister is bringing a proposition which is then bringing an amendment to the proposition that he does not agree with. I think this is not the way government should be run, I think it is amateurish and as I said before I think it is an abuse by the Minister and I will be voting against the ability to lift Standing Orders to allow it to be debated.

The Bailiff :

Just to be absolutely clear, Senator, it is not of course lifting Standing Orders, it is provided for in the law, but it is entirely a matter for the States, as the law makes clear.

3. Senator P.F.C. Ozouf :

The Minister's ability is to assess all the amendments that have come in and to make propositions subject to the leave of the Assembly in order to deal with consequences that have arisen by the amendment. It is clear to Members, if they want to have the opportunity of debating this, to have a revenue neutral option, then they will vote and permit the amendment to happen. I am in the hands of Members.

The Bailiff :

Very well, the appel has been called for. So if you want to debate the Minister's amendment you vote pour, if you do not you vote contre and the Greffier will now open the voting.

POUR: 27

Senator T.A. Le Sueur Senator P.F. Routier Senator P.F.C. Ozouf Senator T.J. Le Main Senator F.E. Cohen Senator S.C. Ferguson Senator A.J.H. Maclean Senator B.I. Le Marquand Connétable of St. Ouen Connétable of Trinity Connétable of Grouville Connétable of St. Brelade Connétable of St. Martin Connétable of St. Saviour Connétable of St. Clement

Connétable of St. Peter Connétable of St. Mary Deputy J.B. Fox (H)

Deputy of St. Ouen

Deputy J.A. Hilton (H) Deputy J.A.N. Le Fondré (L) Deputy of Trinity

Deputy K.C. Lewis (S) Deputy I.J. Gorst (C)

CONTRE: 23 ABSTAIN: 0 Senator B.E. Shenton

Senator J.L. Perchard

Senator A. Breckon

Senator F.du H. Le Gresley

Connétable of St. Helier

Connétable of St. John

Connétable of St. Lawrence

Deputy R.C. Duhamel (S)

Deputy of St. Martin

Deputy R.G. Le Hérissier (S)

Deputy J.A. Martin (H)

Deputy G.P. Southern (H)

Deputy of Grouville

Deputy P.V.F. Le Claire (H

Deputy S. Pitman (H)

Deputy of St. John

Deputy M. Tadier (B)

Deputy of St. Mary

Deputy T.M. Pitman (H)

Deputy T.A. Vallois (S)

Deputy M.R. Higgins (H)

Deputy A.K.F. Green (H)

Deputy J.M. Maçon (S)

Deputy A.E. Jeune (B) Deputy A.T. Dupré (C) Deputy E.J. Noel (L)

2. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010. Amd.(3))

The Bailiff :

Very well, so then we return to the amendment which is to be proposed by Deputy Green and I invite Deputy Green to speak to his amendment after it has been read.

The Greffier of the States:

Page 2, paragraph (b) after the words "as set out in the budget statement" insert the words "except that the estimate of total taxation revenue in 2011 shall be decreased by £4.8 million by introducing exemptions or zero-rating for Goods and Services Tax from 1st June 2011 for the following items: (1) foodstuffs in line with United Kingdom value added tax arrangements, and (2) domestic energy, and the element of the food costs offset of average G.S.T. (Goods and Services Tax) bonus and that income support relating to the items being exempt or zero-rated shall be adjusted accordingly."

1.2.1 Deputy A.K.F. Green of St. Helier :

I think Members might be relieved to hear that I do not intend to speak for too long on the subject because the matter has been well aired and articulated in the past. But before starting I would like to just acknowledge and thank the Deputy of Grouville for her help and assistance in providing information for me.

[9:45]

In the Minister's opening speech, the Minister for Treasury and Resources talked about trust and confidence. Trust and confidence. Of course he is right, this is important and I believe that this Assembly has demonstrated a firm grip on our economy and has the trust and confidence of industries which generate our wealth. This is a win/win situation, as this wealth allows us to help the less well off. That said, there is a problem. Fairly or not, right or wrong, there is a perception that this Assembly does not care about the less well off and those who are commonly referred to as "middle Jersey". This may be unfair but this is the perception out there. Rightly or wrongly, people think we do not care. I know that is not true but, as I said, that is the perception. Taxing life's essentials such as food and heating, in the view of many Islanders, confirms this perception. No matter how we try to mitigate the effect with other allowances or benefits, the fact remains that this Assembly taxes food and heating. Taxing food at any time is wrong and we are taxing food at a time when there is unprecedented food inflation. We heard yesterday from Senator Breckon some of those examples and I have no doubt he will remind Members again today. We are taxing food and heating, not only during a time of rampant inflation but at a time when wages are at best frozen and at worst, for many, reducing. We are taxing food and heating when we have just agreed to increase G.S.T. by 66 per cent. The message heard out there by the ordinary person is that we do not care. I heard from Members yesterday and I quote: "We need to show support for the ordinary person." Well, this is your opportunity. Despite all the assurances given to the contrary, G.S.T. is a regressive tax. It is regressive when you tax food and heating and essentials in life. It is regressive because the less well off and the more vulnerable pay a greater percentage of their income in tax. For many families after the rent or mortgage the remainder of the family's income goes on food and heating. Food and heating that we tax. I know others will argue that the better off pay more and of course this is true, but as a percentage of their total income it is the better off that make a considerably lower contribution as a percentage of their income, as I said. G.S.T. is a rising tax and while it may be possible to argue keep it low, keep it simple - which is a view I do not hold - that

case no longer applies and becomes less and less applicable every time we increase G.S.T. That said, G.S.T. has its merits, not least that it is difficult - even with creative accountants - to avoid paying G.S.T., but the fundamental question is: is it right to tax the essentials in life, essentials that take up a greater percentage of the less well off person's income? I believe not, and that is the whole basis of my argument. Taxing food and domestic heating is morally corrupt. Not only is it morally corrupt, but it goes against this Island's Strategic Plan, this Assembly's Strategic Plan. Let me explain. We look at our plan 2009 to 2014 and we go to number 11, I have marked it in my book here. I do not intend to read the whole lot but I would like to just pull out a few things from here: "Enhance and improve healthcare provision and promote healthy lifestyle. A major shift in health and social care policy is needed if we are to improve Islanders' health and social well being, enough to head off projected increases in health care costs, we need to put the emphasis on provision rather than cure and make healthy choice the easy choice." Why must we do this? Well a healthy population has a greater sense of wellbeing and will be more productive. "Government leadership and action will be required to support individuals in taking responsibility for adopting or maintaining healthy lifestyles. Lead on actions necessary to support people to manage their own health through the promotion of healthy lifestyles." I think people will get the gist of where I am going. "Key indicators, reduce mortality rates for circulatory disease, cancer and complications arising from diabetes." Prevention rather than cure, that is one of our Strategic Plan's aims. So how does G.S.T. on food support this? I do not think that anyone would disagree that healthy diets are a major part of the strategy. This requires a good, sound, basic healthy diet; good, sound, basic food. Please bear in mind that food inflation, according to our statistics unit, is running at 3.2 per cent. But anyone who does the food shopping will know that we are paying considerably more than that and that prices have increased significantly over the last year. It is not that the Statistics Unit's figures are wrong, it is that healthy food such as fresh fruit and vegetables have increased by

12 per cent, potatoes by 19 per cent, wheat in excess of 47 per cent, corn, 61 per cent, and so on. As I said before I am sure Senator Breckon will give you some other examples. These are not my figures, these are figures I got from the Statistics Unit and I am very grateful to them. All those increases are on food that are already at least - and I am a caterer so I know about buying food - 15 per cent higher than the U.K. (United Kingdom) and then we add 5 per cent G.S.T.. If these figures are correct, that 3.2 per cent increase in food costs - and they are, I believe, I have read and looked into it very closely - it stands to reason that some items must have reduced in price. I have just read out the things that have gone up such a lot. They have. Canned foods have reduced in price. Prepared foods have reduced in price. Frozen convenience foods have reduced in price. So the foods that have reduced in price are those that are high in fat, high in salt and high in sugar. Our policy of taxing food is removing the option of a healthy diet from many and driving lower earners in our community to make less healthy foods a staple part of their diet. Not a matter of choice but a matter of survival. I ask Members, how does that fit in with strategic aim 11? I suggest that we are being totally hypocritical here and what is the point of a strategic plan that we ignore. It is a fact that poor diet is a major contributing factor in so many of today's diseases. It is also a fact that these conditions are more prevalent in the lower quintile of earnings and we are spending more and more on food, and anyone who does the shopping knows this. One major retailer confirmed my worst fears when he said that it was the lower priced, high in fat, high in salt, high in sugar foods that have increased in sales, while fresh fruit, fresh veg, non-processed meats have significantly decreased. Not an opinion, not my opinion, but a fact confirmed by retailers. The Medical Officer of Health's report in Our Island Our Health 2009-2010, if you just allow me to refer to a couple of items in here. In page 15 looked at the main causes of premature death - cancers, heart disease, strokes. These were linked to high blood pressure, overweight and low fruit and veg intake. Not something I have made up, it is in the Medical Officer of Health's report. Then go to another page, page 51, I was just picking out cancers but it applies to others as well: "Both men and woman are at risk of developing bowel cancer. This risk increases with age, 8 out of 10 people who are diagnosed with cancer are over 60. Other reasons in the likelihood of developing cancers include a close family history of bowel cancer, taking little exercise, being

overweight and having a diet high in red meat and low in vegetables, fruit and fibre." We tax those items. Having looked at the Strategic Plan then and the Medical Officer of Health's report, what are we - as an Assembly - going to do about it? I will tell you what we are going to do at the moment is we are going to add 5 per cent to those inflationary costs. That is wrong. We are making life more difficult and storing up even more costs to the health service. I am staggered that we have even considered it, it really is indefensible. Now, let us just look at heating. We have had unprecedented increases in heating and power cost, most of which we have absolutely no control over as an Assembly. Of course the price of oil is a major factor here. Keeping it local though, in 2008 we saw an increase of electricity of 25 per cent, I know this was later reduced by 5 per cent in 2009, but electricity is the heating choice of our social housing, oil has continued to increase and despite that 5 per cent reduction the statistics office tell us that there has been an overall a 6 per cent increase in the costs of heating. Life is hard out there, hard out there for many people. There are many people that are struggling. Our average local families and the elderly are living on fixed incomes and often experiencing wage freezes and reductions in wages. The elderly have, if they have got savings, little interest being generated by their savings and those are the hardest hit of all groups and they are feeling the pinch and that is why I say G.S.T., when you put it on food and heating, is a regressive tax. Now, just moving on quickly to the costs of introducing these exemptions, the loss of taxation income is one, the administrations costs to both the States and the traders is another. But dealing with the latter first. So long as we adapt in its entirety the U.K. food exemption list, no additions, no extractions, there may be things in there that we do not like and I have to say I started from the point of view of: "Let us take G.S.T. off only the healthy foods" but that is far too complicated. So long as we take that list in its entirety, let the U.K. have the battles over jaffa cakes versus biscuits - and I am sure somebody will have a packet of jaffa cakes to show us today - milk versus smoothies. Let them do that; we will just embed in law that we will exempt

the food that the U.K. have on their list. So we do not need a department to do that. The Treasury Department tell me that they will need 3 more staff along with associated costs, why? Having an established system that has bedded down in the U.K. over many years, having zero-rated goods already, the principle exists, why does it take 3 staff to take the list from the U.K. and distribute it to the retailers? I would like to hear why. I wondered if the Minister for Treasury and Resources had spent perhaps a little bit too long as a Minister for Planning and Environment because my experience of working with planners and architects is at the drawing stage when you are planning a building - remember you have not got a brick laid, you have not even dug a foundation - you say: "I do not need that power point there" and they say: "Well, that will not save any money." "But I would like another power point over here" and there is a deep, sharp intake of breath and £2,000 added to the bill. I just wondered if maybe the Minister for Treasury and Resources had spent too long with the planners. Anyway, back to G.S.T., there is no need to increase staff. We can make this as simple or as difficult as we want to make it. There is a one off cost to retailers but this is significantly reduced if you stick to the U.K. lists. There may be things on there that you do not like and I heard on the radio yesterday talking about gingerbread men with buttons or gingerbread men with belts, and it is quite ridiculous that one falls in to one group of tax free food and not the other. But as long as we stick to that, accept the principle that we wish to help the less well off and put up with some of the idiosyncrasies of it, then we do not need a big department. The software systems that the retailers use over here are geared up for zero-rating and are geared up for the U.K. list, as long as we keep it simple. Simple from my point of view, not simple from the Minister for Treasury and Resources point of view. I am told it will be difficult for the small trader, but let us just examine that, 98 per cent of food sales go through the major retailer. Those who have a turnover, I think it is below £300,000 - the Minister for Treasury and Resources will confirm that - are exempt anyway, do not have to add G.S.T..

[10:00]

So that just leaves a few medium sized companies who I can assure you are happy to re-price every time they get a food delivery at the moment. With the rampant food inflation the way it is, they have to re-price every time and I know that as a caterer when I was purchasing. So there is no difficulty there then. But there is the difficulty of £4.2 million in balance that we will lose in 2011's budget. Remember, this is not a full year effect so it would be in excess of £8 million if it was a full year effect. So about £4.2 million. But there is the whole of 2011 because we are talking about an indicative 3 year budget. There is the whole of 2011 to find other ways of plugging that gap. I have decided not to speak about it this time, but that leads me on to a couple of suggestions which I will just brush over, 6 per cent G.S.T. is not one of them. I can tell you that now, that would be 100 per cent increase in G.S.T. so that is not one of them. But I will speak about that when the Minister for Treasury and Resources brings his amendment. There are other alternatives, as I suggested to the Minister for Treasury and Resources, such as taxing non-Jersey foreign-owned company .. sorry, Jersey .. you know what I mean. But I will resist debating that now because we are going to have that debate later, but that is an option. I think I have dealt with most of the comments the Minister for Treasury and Resources made. But the Minister for Treasury and Resources, in my view, is opting for a "let us make this difficult" view. Members will have to decide for themselves which is myth and which is not. On page 9, I think, of the Minister for Treasury and Resources' comments he states that exemptions might not pass through to lower prices. I think that is page 9. Of course this is a risk, because I felt very let down last year with some of the hospitality when we debated very hard, won that, and then it gets an increase almost immediately afterwards. But I have had an absolute guarantee [Laughter]. An absolute guarantee in writing, from the Co-op which is one of the major retailers, that they will lower their prices and that is both from the chief executive currently and the chief executive designate. When they do lower their prices, if other traders choose not to then I suggest the public vote with their feet and go and get their double divvy on whatever day it is. Tuesdays and Wednesdays, thank you. In other words, the consumer will control this one because we have got a cast iron guarantee from the Co-op that they will do that. Just before concluding, some Members have expressed to me that this is a blunt instrument, that it is not targeted, and I suggested it is better honed than freezing G.S.T. for 6 months. If accepted the principle will be there permanently. If accepted, only food and heating will be exempted. If accepted, the better off will be making larger non-food purchases and will still pay 5 per cent. We have an opportunity here to help the most vulnerable, to help the less well off in our society and support those members in making healthy choices in their diet. We have a chance to show that we care. No matter how we look at it, G.S.T. when you tax food and heating is

regressive. Taxing life's essentials is morally wrong. I ask Members when they consider voting, if you think we are making things complicated - I do not support that view - is it complexity versus simplicity or right versus wrong? Please bear that in mind.

The Bailiff :

Is the amendment seconded? [Seconded] Connétable D.J. Murphy of Grouville :

A point of clarification, the proposition asks us to introduce exemptions or zero-rating. I am sure, as the proposer knows, there is a vast difference between the 2. Could he explain to us which one he favours and why?

Deputy A.K.F. Green:

I do not favour any one in particular, I am quite happy to see the tax either removed, i.e. zero-rated, or exemptions. I do not mind as long as people do not pay tax on it.

The Connétable of Grouville :

There is a vast legal difference here.

The Bailiff :

The Deputy has made his position clear, he does not mind which it is.

The Connétable of Grouville :

There is a vast legal difference, perhaps we should be told what it is.

3. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – amendment (P.157/2010. Amd.(3) Amd)

The Bailiff :

Well, then you can raise that in your speech, Connétable . Very well then, so we have 2 amendments to be dealt with then to Deputy Green's proposition. The first is name of Senator Ferguson and I will ask the Greffier to read the amendment.

The Greffier of the States:

Page 3, after the words "food costs offset average G.S.T. bonus" insert the words "of income tax".

1. Senator S.C. Ferguson:

I do not expect Members to agree to this amendment, you know, they are considered the poor of the Island and so on. However, I am not being cynical. What this amendment does, due to the very helpful comment by the Council of Ministers which did my calculations for me, it highlights the extent to which this House has bent over backwards to make provision for the less well off and for those on marginal rates when we brought G.S.T. in. As the comments say, I am not sure which page it is, I have got the word copy of it, but as the comments say, we increased income tax thresholds by an extra 3.5 per cent, we included protection from G.S.T. for those on the original income support. There was an allowance for households who did not pay tax of the G.S.T. bonus and the Le Fondré proposition doubled the G.S.T. bonus and provided an increase in income tax exemption. This was one of the prices we paid for not having food exemptions when we brought in G.S.T. so that we in fact gave a financial benefit for those on low to middle incomes of £12 million which was twice the estimated cost of exempting fuel and food from G.S.T. in 2008. You know, you cannot have your cake and eat it. You might want to, but particular in straightened financial times it is totally unfair to not only take the £12 million but also have the benefit of the exemptions and this is the basis of my amendment.

The Bailiff :

Is the amendment seconded? [Seconded]

2. Deputy T.M. Pitman of St. Helier :

Very simply I would just like to say, now I am far too young to remember so perhaps people will correct me but was it McMillan who said we never had it so good? Well, if we all follow Senator Ferguson's attitude, some will never have it at all so I will never vote for this. Thank you.

3. Deputy P.V.F. Le Claire:

It is unfortunate, I did not really appreciate the language that the Senator used when she said that the States had bent over backwards to help the people in the .. I am not going to get the quote exactly right, but the States had bent over backwards to help those most in need when we introduced low income support. I think what we need to bear in mind is the fact that low income support was a move away from the parish system of welfare payments that have been in place in Jersey for a number of years and transferred over and tried to make some sense of the - and is still trying to make some sense - of the benefits that we provide people that are not necessarily there because of the fact that they are in the low income bracket. Maybe because, in some instances, they are there because of medical reasons. If we take into account also the fact that we have got a significant bill in relation to rent rebates because this House has failed continuously to address the

high cost of housing. I am reading at the moment the Jersey Island Plan Inspector's Report and I am hoping most Members will help me in grilling the Minister for Housing and the Minister for Planning and Environment in the future as to whether or not they have read this in great detail because it is certainly recognised in here by the examiners of the Island Plan in the Housing section that the States is in a very, very serious position and it is in a situation that is worsening in relation to housing and the cost of housing. I find the comment that the Senator made absolutely unpalatable and I think that we need to bear that in mind when we vote against this today and let her know that not only is her amendment unacceptable but her comments are as well. I think people need to realise that we are now funding the improvements to the housing programme in social housing from the sale of housing within the social sector. What kind of nonsense is that? If we continue to ..

The Bailiff :

Deputy , I think this is drifting a little way off the amendment. Deputy P.V.F. Le Claire:

I am trying to confine my remarks to "we have never had it so good" and "the States have bent over backwards to help those" ..

The Bailiff :

Yes, but the amendment is to withdraw the tax mechanism introduced. I think you need to keep to that.

Deputy P.V.F. Le Claire:

I would just like to finish then, because I may be off track, I may not be able to get back from it, I have been that pushed off the road by the comment. I think it is also important to recognise this. Low income support has been frozen at this year's rate and that means there is not going to be anymore than there was this year for next year. So what happens if there is more people that need it? I just think this political approach from the Senator in what she is doing and how she is putting it across is going to inflate and antagonise people. Certainly it has gone down very badly with me this morning.

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

Yesterday I called one amendment from Senator Ferguson mean-minded and mean-spirited. This indeed reinforces that opinion. The fact is that yesterday this House voted to tax the people of Jersey by an additional £30 million annually, taking from the average household around £900 a year in tax. If this proposition is to succeed it will put some perhaps 10 per cent of that tax back. That is all. We are talking of tens of pounds over the year rather than hundreds and yet this Senator proposes that we further the damage to the prospects of the people of Jersey by her mean and petty amendment. I urge Members to oppose this wholeheartedly.

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

I am just slightly confused in the conversation I have just had. I was originally supporting this. It is a very simple principle. We have previously put income tax exemption thresholds up by various amounts to compensate for G.S.T., what Deputy Green in his proposal on the bottom line he said: "In the element of the food costs offset the average G.S.T. bonus and of income support relating to the item being exempted or zero-rated should be adjusted accordingly." My understanding from Deputy Ferguson's amendment is that all she is doing is inserting the words "income tax" in there. The principle of that is that where we have previously given amounts on income support and a G.S.T. bonus, which Deputy Green is willing to take away in recognition he thinks - that is a different debate - that people will be better off under exempting food, he has ignored the fact that income tax thresholds were also adjusted. Therefore, purely from a balancing the book principle, all one is going to do if you are going to take away from the lower end, you should also be taking it away from those who have benefited previously. That was my understanding and, if I notice any reasons for not supporting it - which I will wait to hear about - I was going to vote for it.

6. Deputy A.K.F. Green:

I have to say I was angry when I saw this amendment come through. Last night I went to see a play at Les Landes School and excellent it was too. Scrooge. [Laughter] Bah humbug, and this would make part of that script, I think very aptly.

[10:15]

I cannot believe it. Food and heating is a small part of what people pay G.S.T. on and that income tax allowance was for the whole of the G.S.T. Unfortunately I do have the figures on my computer, I do not have them clearly to mind, but as I remember it was something like 12 per cent or something, and I am sure the Minister for Treasury and Resources will tell me, of the G.S.T. take was food. I cannot remember the percentage. But we are going to take away all of the allowance just to score a political point, I find it disgraceful.

7. Deputy M. Tadier of St. Brelade :

Let me address that point, first of all. It seems curious that one Deputy who has voted to increase G.S.T. by 2 per cent without any assurance that exemptions are even going to go through, is calling another Member who wants to take a very small amount out of people's pockets, rather than a very big amount of 2 per cent which will effect everybody in the Island, whether it is exempted or not, is calling another Member Scrooge. But that is just my personal opinion. Nonetheless, of course I do not agree with Senator Ferguson, I think she is flawed for 2 reasons in her amendment. First of all because she is proposing to take away the whole of the G.S.T. bonus, what I am saying is here we are looking to take exemptions off food, but those who get the allowance still have to pay G.S.T. on many other items, so that is partly why I think it should remain. The other point that she made though is she has this feeling that the States only really cares about the very poorest in society and ignores perhaps another swathe of society, which I have some sympathy for, I think that is partly true. But if she really does want to do something that will help right across the board in Jersey and not simply for those on the lowest incomes, all she has to do is simply vote for the lower rate of 5 per cent rather than of 6 per cent and in doing that she will be doing something for the whole of the Island rather than for a small section which she thinks is currently the case. So I implore her to really just forget about this particular amendment and go for the lower rate of 5 per cent by which she will be helping all of her Island constituents.

8. Senator P.F.C. Ozouf :

This debate in all of its parts has the potential of becoming really sort of an emotionally charged debate. I think many Members have made their mind up on this amendment and probably a lot of the others, so I think I am going to certainly be brief and hopefully other people will be too. I probably need to have a word with Deputy Le Fondré again. Actually the Council of Ministers is opposing this amendment for the reasons that are set out in the comment, which are very clear, that the proposal by Senator Ferguson goes much further than those originally given in terms of the G.S.T. bonus. We will come to the substantive debate about the revenue neutral issues I think it goes to. I think Senator Ferguson has done one useful thing, if I may say - and I am going to urge vote Members to vote against it - she has reminded Members of just how much money was given back for the whole of the introduction of G.S.T., not just the issues there. It was not simply it was a net revenue gain to the States but a substantial amount of give back in terms of other amendments. So the Council of Ministers and I do not support this. I thank the Senator for having made the point but I think we should probably just conclude this, I am not sure that this is the debate really to have.

9. Deputy A.E. Jeune of St. Brelade :

The way I interpret this amendment is this: it is okay to take away the G.S.T. bonus that we give to people who do not pay income tax in order to compensate them for the 3 per cent G.S.T. on food, and it is okay to take away the elements similar that were applied to income support. But we are saying it is not okay to take the element that was applied to income tax threshold levels, I do not understand what we do not understand about that. It is okay to do it to old age pensioners, and others, whose incomes are below the income tax thresholds, it is okay to take it away from people on income support, but not taxpayers. I will be supporting this amendment. Thank you.

10. Deputy D.J.A. Wimberley of St. Mary :

I am now, after the last 2 contributions, more confused than I was. Because my understanding was in distinction to some others, that what this amendment was doing was removing what we had given back, but only on the food element, not on the whole of the G.S.T. and that seemed to me to be reasonable.

The Bailiff :

Can I assist from the Chair, Deputy , because certainly, as drafted, it must be that you are right. In other words, what Deputy Green's amendment says is the elements of the G.S.T. bonus and of income support relating to the items being exempted or zero-rated shall be adjusted. What the amendment of Senator of Ferguson does is add in there, also income tax. So it would read: "The elements of income tax relating to the items being exempted or zero-rated shall be adjusted accordingly." So from that I take it that what the Senator is saying is that part of the income tax allowance which was brought in because of food and other matters should now be taken out. So that seems to me clear from the wording of the amendment.

The Deputy of St. Mary :

Thank you, Sir, for that clarification which will have helped all of us. That is the first point. The second point is that in the flurry of papers that we have all been given in the last 2 days from the Council of Ministers, and maybe others, do not have the comments. So the comments of the Council of Ministers on this particular amendment, I have all the others, I do not have that and so I just wish that one other Member of the Council or another Assistant Minister could simply stand up and explain why the Council of Ministers are opposing this amendment. Because the Minister for Treasury and Resources said they are and that was the first I knew of it and I would just like to know why.

11. Deputy I.J. Gorst of St. Clement :

I appreciate that it is slightly confusing and the words in Deputy Green's amendment that the Senator is trying to amend appear quite innocuous in that we will just be taking away the elements which relate to food or which were up-rated in relation to food, Sir, and I thank you for your clarification. I think the problem the Council of Ministers had is that the whole of the G.S.T. bonus

- if I just take that one first - the whole of the G.S.T. bonus was introduced to offset against food, even though it was not related to the physical amount of the cost of food in the quintiles which related to G.S.T. So an amount was given, it was given by this Assembly because it felt that it related to food but it did not have any relationship per se to the amount that people paid in G.S.T. on their food bill. That is perhaps where there is some confusion. If we move on to the income tax thresholds, they were increased twice in relation to G.S.T., 3.5 per cent and 2 per cent respectively. Members will remember because we have addressed this issue over a number of times, they were increased, it was said because of some of the issues raised during previous food exemption debates, therefore, propositions came back saying: "No, let us not exempt food, let us do this instead." That amount of money was not directly related per se to the amount that the community pays in G.S.T. in relation to food and, therefore, there is some confusion. If this is accepted the Minister for Treasury and Resources for one is going to have quite a bit of difficulty in going away (a) understanding first what amount of the increase is in relation to what the community pays in G.S.T. in relation to food, and (b) what the Assembly wanted when they were approving those propositions and was it in relation to food or was it in relation to the G.S.T. spend in general. That

is where the confusion arises. I am not certain that I will have thrown much light on it in this debate but that is why the Council of Ministers put forward their comments that they were opposing it for those reasons. Members might take a different view and say no, they think that perhaps, for example, the 2 per cent was in relation to food because of what was said during the debate. But, as we all know, what is said during a debate and what the proposition says and then what happens can be 3 different things. So I will maintain my opposition to this for those reasons and I hope those reasons are now somewhat clearer. Thank you.

12. Senator S.C. Ferguson:

Well, at least people understand the amount that we put into insulating people on the food side. Deputy Le Claire missed my point, he got on to planning, he may have been in the States when the rent rebate debate came in, I was not, so I cannot comment on that. For the rest of the people, whether they were for or against, thank you for your comment and I ask for the appel.

The Bailiff :

The appel is called for then in relation to the amendment of Senator Ferguson. I invite Members to return to their seats and the Greffier will open the voting.

POUR: 8

Senator B.E. Shenton Senator J.L. Perchard Senator S.C. Ferguson Connétable of St. Martin Connétable of St. Clement Deputy R.C. Duhamel (S) Deputy J.A.N. Le Fondré (L) Deputy A.E. Jeune (B)

CONTRE: 38

Senator T.A. Le Sueur Senator P.F. Routier Senator P.F.C. Ozouf Senator T.J. Le Main Senator A. Breckon Senator A.J.H. Maclean Senator B.I. Le Marquand Senator F.du H. Le Gresley Connétable of St. Ouen Connétable of St. Helier Connétable of Trinity Connétable of Grouville Connétable of St. Saviour Connétable of St. Peter Connétable of St. Lawrence Connétable of St. Mary Deputy of St. Martin

ABSTAIN: 0

Deputy R.G. Le Hérissier (S) Deputy J.B. Fox (H)

Deputy J.A. Martin (H) Deputy of St. Ouen

Deputy of Grouville

Deputy J.A. Hilton (H) Deputy P.V.F. Le Claire (H) Deputy of Trinity

Deputy S. Pitman (H) Deputy K.C. Lewis (S) Deputy I.J. Gorst (C) Deputy of St. John

Deputy M. Tadier (B) Deputy of St. Mary

Deputy T.M. Pitman (H) Deputy A.T. Dupré (C) Deputy E.J. Noel (L) Deputy T.A. Vallois (S) Deputy M.R. Higgins (H) Deputy A.K.F. Green (H) Deputy J.M. Maçon (S)

4. Expenditure Proposals for 2012 and 2013 and Draft Budget Statement 2011 (P.157/2010): third amendment (P.157/2010 Amd.(3)) – second amendment (P.157/2010. Amd.(3) Amd.(2))

The Bailiff :

Very well, then we move next to the amendment lodged by the Minister for Treasury and Resources, the one which was referred to earlier, and I will ask the Greffier to read the amendment.

The Greffier of the States:

Page 3, for the words "the estimate of total taxation revenue in 2011 shall be decreased by £4.8 million by introducing" substitute the words "the rate of goods and services tax shall be increased to 6 per cent from 1st June 2011 and not to 5 per cent as proposed in the draft budget statement with the introduction of."

1. Senator P.F.C. Ozouf (Minister for Treasury and Resources):

I hope Members have got the amendment to hand because it might just be helpful just to cast their eyes over the numbers. The impact of zero-ratings, which is the assumption that we are taking from Deputy Green's option, the impact of zero-ratings of food and domestic energy is directly £4.8 million for the 7 months, £8.2 million for the full year. The net cost, netting off the cost of income support, is £4.6 million and £7.8 million for a full year. The rate required to be revenue neutral is in fact in between 5.7 and 5.8 per cent. Despite the comments of Deputy Green who will still remain a good friend in terms of Assistant Ministers and his work in this Assembly, I think he knows that there is additional costs over and above just simply the revenue and there is also the administrative costs and there is also, based on all the experience of other jurisdictions that have variable rates of G.ST., there is a compliance cost. We have a very high compliance cost in terms of the revenue from G.S.T., that will be impaired if we have exemptions with a more complicated system. That is absolutely backed up by the advice of the global forum such as the O.E. C.D . (Organisation for Economic Co-operation and Development) and I.M.F. (International Monetary Fund) in terms of that. Hence also you need to consider the complications of having a fractional rate in terms of G.S.T. that is complicated for business. Mistakes are made, the advice is that you should have a rounded number, so taking all those things into account, that is the construction for the 6 per cent. The Council of Ministers' position is to have a balanced budget to fill the deficit by 2013. That is the responsible thing to do based upon the advice of the fiscal policies we have rehearsed before. This amendment will ensure that no matter what the outcome of the exemption debate on food, it is revenue neutral. My opinion is that we should have a medium credible term plan which balances our books. This has a cost, hence the difficult decision that if we want exemptions we have to accept that there is no rabbit, there is no simple solution, we have to raise the revenue from consumption taxes. I will come back and summarise at the end but Deputy Green

is no doubt going to say there is a lot of other sorts of revenue. I am afraid there may well be other forms of revenue and we need those other forms of revenue in terms of economic growth.

[10:30]

This needs to be taken as a standalone item. We need that foreign-owned entity revenue; we need a rate of 6 per cent if we are going to have an absolutely clear debate in terms of revenue neutral policies. I make the amendment.

The Bailiff :

Is the amendment seconded? [Seconded]

2. Deputy A.K.F. Green:

I thought I would come and use my own words and there are plenty of other options and the Minster has to look at them. But maybe I need to go on one of the Minister's sartorials, I do not know, but when I was looking at this I have to say I was quite angry when the amendment came in, but when I was looking at this, taken the Minister's figure £7.8 million on a full year, as I understand it a 1 per cent increase in G.S.T. will bring in around £15 million. So is this to create another slush fund for the Minister to spend money on. We could do it the other way around. We can go £4.6 million greater expenditure, less income, if you like, whichever way you look at it for this year and plug the gap next year. It is a 3 year plan to get within a neutral budget. There are loads of other opportunities for the Minister to get that money in. I do not really want to give him another £6 million, £7 million slush fund.

The Bailiff :

Does any other Member wish to speak?

3. The Deputy of St. Mary :

This is pretty extraordinary that everyone is hanging back on just voting on 6 per cent instead of 5 per cent. It is a fairly odd way of carrying on. I just want to make one point really which is to emphasise to Members what the J.H.A. (Jersey Hospitality Association) circulated to Members in their recent letter. Their line I think is that they would like to see G.S.T. rises restricted to 4 per cent. We should have gone for the 4 per cent. Yet that was not even brought. So now we are looking at 6 per cent. I cannot do better than to put on the record and remind Members of what they say in their letter. "The hospitality sector is responsible for generating G.S.T. receipts of approximately £6 million per annum; some 13 per cent of the total." That is about one-seventh or one-eighth. "Hotels contribute almost 50 per cent of the £6 million. It is understood that 80 per cent of the current 3 per cent G.S.T. charge has been absorbed into prices and tariffs in order to remain competitive. This has significantly contributed to profitability falling to critical levels." This is in our second industry and that is just the effect of 3 per cent. "The Treasury argues that G.S.T. is not a tax on business as it can be passed on. This is not the case with the accommodation sector who have not been in a position to pass on G.S.T. and, therefore, it has become a direct tax on turnover." They also point out - which I find interesting and it is extremely relevant - about the contrast between the impact of this tax and the impact of possible alternatives that the Assembly could adopt. They are talking about the 2 or 3 per cent increase in the rate of G.S.T. "This is contrary to the position of the finance industry that is protected by the I.S.E. (International Service Entity) provisions." In other words, if we go for 2 per cent or 3 per cent in increase in G.S.T. the finance industry is not affected. They simply get the proposed rise in I.S.E. from £100 to £200. "These proposed increases will have little or no effect on their pricing or competitiveness. We believe, therefore, that the hospitality and retail industries will bear a disproportionate burden of future tax rises." A disproportionate burden. One of the key elements in this debate about 6 per cent is where the tax burden should rightly fall. I was in conversation yesterday with someone who works in the finance industry. They said that if I.S.E.s went instead from £100 to £200 yielding £3 million, if they went to £500 yielding an additional £9 million it would not make a jot of difference to those businesses because they are not here for whether it is £100 or £200 or £500 in fees. They are here because of the quality of the advice. They are here because of the professional relationships. There are here because of what Jersey has to offer. As we are repeatedly told, we have a world class finance industry. They are not here for £200 or £300 or £500 in the fee that a business registered here pays. What we are talking about here and the specific point I want to make

is we are disadvantaging our second most important industry. That is all. The Bailiff :

Does any other Member wish to speak?

4. Senator F. du H. Le Gresley:

I really only want to repeat what I said when we discussed whether we were going to debate this amendment at all. A 6 per cent basic rate proposed has not been consulted on with the general public. I would also add that the 2 per cent over the social security ceiling for employees and employers has not been consulted on. Our Minister for Treasury and Resources prides himself on consultation with the public but we are going to end up with a budget that has not been consulted on in tax raising measures. I would also again follow the Deputy of St. Mary on the effect that a 6 per cent rate would have on the tourism industry. When I discussed this with some leading hoteliers they described it as a doomsday scenario and an absolute disaster for the industry. I would also ask the Minister, we now know that if we 5 per cent rate he proposes to reduce the de minimis waiver to £240. I would ask him when he sums up does he now propose to reduce the de minimis waiver to £200? I would hope that that would be his intention. I will also remind Members that we still have other amendments to debate which if they are approved will raise extra revenue in 2011. I would much prefer to see some of those amendments approved, particularly mine [Laughter], than see a 6 per cent basic rate. This is something that we must reject.

5. Deputy G.P. Southern :

Following yesterday's results I quite frankly fail to see the logic on which many Members of this Assembly work. I am almost at the stage of giving up trying to look for logic [Approbation]. Giving up trying to look for logic in the decisions of this Assembly [Laughter]. Do not be silly. That is in my D.N.A. Obstinacy is built in. So I will not be going away. The Assembly yesterday voted to raise taxes on the people of Jersey by £30 million. There was no escaping that. What they said deserves to be treated with respect, despite many people saying that middle Jersey or low earning Jersey, all of Jersey .. What they are saying is: "Ouch, the recession is hurting." Whether they are jewellers or retailers it does not matter. Jersey is hurting. This House yesterday chose to ignore those cries and say in effect the ordinary working people of Jersey will pay for this recession. Be absolutely clear about that. If anyone should doubt that that is the case they only had to listen to the radio this morning which made explicit what is happening about the solution to the problem of taxing 1(1)(k)s. The answer was very clearly presented this morning that taxes on 1(1)(k)s are to go down. World income of £3 million will now pay a tax rate around the 4 per cent mark. We are paying more than that in G.S.T. and if this goes through we are paying even more than that simply in G.S.T. But 1(1)(k)s with a world income of £3 million annually will be paying tax at a 4 per cent rate. What sort of a society is this? I made no mention of it yesterday but I will today. There is an election coming up, October next year. The Minister for Treasury and Resources will not be facing the electorate but most of us will be in one form or other. It is not very far away. It is 10 months. The voters will remember. They will remember who voted to increase their taxes. What we are doing today is I think very pleasant and may soothe some consciences in this Chamber but will make very little difference to that hike in taxes paid by the average family. If we vote for this amendment, it will make no difference whatsoever because we will make sure that we will squeeze every last drop out of those ordinary working Jersey families by raising G.S.T. to 6 per cent. I have been saying to people throughout this debate, recognise what this means. I have checked again - I checked my figures again today - for the average Jersey household it means around between £800 and £900 a year additional taxation. For pensioners on fixed incomes if you are a single pensioner it means around £300 additional taxation; for a couple it is around just over £500. These are the sorts of figures we are taking out. If we vote for 6 per cent then we are making sure there is no relief whatsoever. If we go with the amendment and exempt food and fuel then we give some redress but it really only is a small amount. I just want to question the figures that have been presented to us today because I do not think they add up, whichever way you look at it. We are being told that in order to pay for this exemption we are talking about a loss of is it £4.8 million over 7 months and £8 million in a year. I cannot find any correspondence of that with household expenditure figures. Even if one were to take simply the number of households in the Island which is something like 37,000, 38,000 households, if one were to take those figures then we get a figure of food and fuel expenditure of around £90 per week on average. When you do the sums as to what that means, that means a loss in G.S.T. revenue of around £3.7 million, £4 million in a full year. Yet we have got figures in front of us to say, no, it is twice that amount - £8 million - and anyway there are additional compliance costs and administration costs so we have got a full 1 per cent whacked on everything in order to cover that. I simply do not believe the figures. Even if one takes the rough and ready £100 on fuel and food on average - and I am talking about on average from the Household Expenditure Survey 1984-85 up-rated by inflation, around 18 per cent over the time, do the calculation, do the sums - they do not come out anywhere near that.

[10:45]

I think we are being conned. Deputy Green spoke very briefly and said I cannot believe these figures. I have looked at the figures and I cannot believe them either. We are whacking on a full 1 per cent if we accept this amendment which does indeed give the Minister lots of money that we took off him yesterday with Deputy Vallois' amendment; took out of his slush fund yesterday. Here he is. Here is a quick instant way to get it back. It will be. It will be slopping around somewhere waiting for some more expenditure. The one message I heard yesterday from right, left and centre was that we must make the savings before we raise the taxes. We did not vote that way but the sentiment was expressed time and time and time again. It did not translate to votes but never mind. That is another day. No tears. No milk spilt. We return. [Aside] No, none left for kids or otherwise. I think we are being led a dance. The 1 per cent increase is way in excess of what is needed. This 1 per cent excess should be rejected. I will of course support the main amendment to exempt food and fuel because as I said yesterday .. especially at the Constables Bench when asked: "Are you still against G.S.T. at 5 per cent?" Yes, I am. I will maintain my opposition to G.S.T. in all its forms. I point out 2 things. Even if we accept this amendment it is a relatively small amount of money that we are not taking away from the average household. It is a drop in the ocean. Even if we do, it will not save many seats around this Chamber when it comes to October. Bear that in mind. But please, please reject this con that is being foisted on us by the Minister for Treasury and Resources.

The Bailiff :

I am sure you are not meaning to imply that he is doing this deliberately? [Laughter] Deputy G.P. Southern :

Sir, I have had many experiences in this Chamber and I am often faced with a choice, conspiracy or cock-up. Inevitably, 90 per cent of the time it is a cock-up. It is a mistake.

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

I was going to speak in similar terms but as Eric Morecambe told André Previn: "The right notes but the wrong order." I was not going to say that but I just thought it was a good joke, given the intensity of the debate. [Aside] Yes, thank you. What I was going to say, yes, the Deputy of St. Mary asked why are you not getting up? The reason I am not getting up: (a) I think a lot of us are getting bored stiff at the fact that this debate is going in the wrong direction; and (b) rather as in fact Deputy Southern said, this is a spoiler. I do not think it should be given the decency, quite frankly, of a full debate. The Minister for Treasury and Resources feels he is in a box, perhaps of his own making, and he had to run this although quite clearly his heart is totally, totally not in it. So why are we having to do this? I would have thought as we get through the exemptions debate, the proper debate will be reflected in the propositions of people like the Deputy of Grouville and Senator Le Gresley. It will be how the balance is achieved in our tax system and where the balance should lie, where the revenue collection sources should lie and so forth. That is where the proper debate will lie. This is totally, totally a red herring. I may be naive but I did not think there was a chance in this world, if I may put it in a delicate fashion, that this would ever get through. It is being brought up totally as a spoiler. The Minister knows that. Let us move on.

7. Deputy P.V.F. Le Claire:

Profligacy, profligacy, profligacy. I will try next time. Profligacy. Give them more and watch it grow. Hansard is a wonderful thing. We had a difficult time getting it in but it is in now and it is coming back to haunt Members. No doubt one day it will come back to haunt me. Last year's budget debate is there for all to see, word for word. I have great pleasure in identifying what I think is wrong with this proposal.  I know it is under Standing Orders that the Minister for Treasury and Resources is doing this but really it afforded no Member the opportunity to amend his last minute amendment. It is not just a small amendment that he is bringing. It is a significant amendment. A 100 per cent increase in G.S.T. without consultation. Quite frankly if I had of brought anything near this .. and I bring things that are nowhere near this all the time and they are just laughed out of the Assembly. I withdraw most of them because I know I have not got a hope in Hades. Deputy Power last year when he took £4 million away from the Minister for Treasury and Resources started off by saying this and it is quite funny when you read it, if I may be allowed: "We are faced with the tail wagging the dog in this Assembly." This is Deputy Power. "We are not in control of what is happening out there. We are not in control of spending and then we are asked to support these propositions. The public perception of this Assembly right now is low. It is one of dithering. It is one of time wasting. It is one where we do not make decisions clearly. It is one of endless debates  about minutiae and ourselves  and we really  need to  come out  strong sometimes. I say to Senator Ozouf and I say to my colleagues on the Council of Ministers and I say to Deputy Trevor Pitman .. Deputy Pitman made a statement to the Assembly 2 or 3 weeks ago that all Ministers and all Assistant Ministers vote the same way. They do not do that. I can say that when I lodged this amendment which was about removing the duty on alcohol and tobacco, I did not have one phone call from a Minister or Assistant Minister to try and dissuade me." This was last year. He did not have one phone call from a Minister or an Assistant Minister to try to dissuade him from removing £4 million from the budget. The Assembly voted to remove £4 million from the budget. The only phone call that we recognise he had was from the Minister for Treasury and

Resources, Senator Ozouf , in asking him at the last minute whether or not he would split the vote. Then we go on. We jump on a bit more. Sorry, I thought I was reading the Strategic Plan, once upon a time. No, I am not. I am reading Hansard. Senator Ozouf went on to say this and I will jump in halfway: ".. just finally 2 more Members. Deputy Power, we are both early birds. We did have a conversation on the telephone this morning and clearly there are lessons that I think can be learned in relation to the duty issue. He did ask me to put forward an amendment that was a halfway house and the advice I had was that that was not appropriate for me to amend something that I was putting forward. Having said all that, there has been a clear decision. I accept the authority of this Assembly. I will consider and take soundings of whether there are some that need to be brought back next month." Last year he did not want to bring an amendment at the last minute to a proposition that was going to strip us of £4 million of revenue because he wanted to allow the Assembly to have its authority. Yet this year an amendment has been lodged for some time identifying the impacts upon society upon food, the least able, driving them into an unhealthy food option and the heating where people can least afford in some sections to do so. Yet where we have £4 million of lost revenue from industries that are extremely damaging and costly to society, not a single thing was done. No Minister and no Assistant Minister came forward and said we should be tackling alcohol and we should be tackling tobacco. Unfortunately most Members got caught up in the middle Jersey argument and lost sight of the reality. We spend lots of money on the results of alcohol abuse. We spend lots of money on the results of tobacco abuse. We lost £4 million. With the losses of the effects and the losses of the revenue combined, I would argue that it does not come anywhere close. It does not come anywhere near the kind of loss that we are going to see if the Assembly supports Deputy Green. To be honest, I think the Minister for Treasury and Resources may not have wanted to do this. He was either wrong to do this or he was wrong not to address the year that it has taken to bring back the duty increases on alcohol and tobacco. As somebody said earlier, you cannot have your cake and eat it too. I will not be supporting a 6 per cent level of G.S.T. but I am very, very grateful for the Minister for Treasury and Resources to finally tell me and other members of the public where it is heading because G.S.T. or V.A.T.

(Value Added Tax) in every other country in the world, if you look at that percentage it is 7 or 8 per cent. We have taken G.S.T. from New Zealand. If Members want to know where we are heading, let us go and look on the Internet and look at all of the other countries. We have got a clear signal from the Minister for Treasury and Resources in this proposition, 6 per cent. This is where we are going while we are continuing to waste money, not cut any of our States expenditure and spend in a ridiculous way on many, many other things. The only solution we have got is to tax the poor. Interestingly, just in summation, they wanted efficiency savings of £4 million. The other thing that I will finish off with which has not been tackled because let it drift. It is not important. It will be done the minute Zero/Ten is found not in compliance though. This is Senator Ozouf again: "I am hopeful in the F.S.R. that I am going to find the solution to that Jersey versus non Jersey owned identity which is worth about £10 to £15 million." So last year he did nothing about alcohol and tobacco which cost £4 million and the consequential results. He did not bring back a proposition a month later like he could have done to split it as he said he would have done if he had had the opportunity for Deputy Power to amend his proposition. Deputy Power was not prepared to split it and he was not able to split it last year. We were told: "I was not able to, I did not have time." Yet halfway through the debate  we see  an amendment  coming  in on the  back of the Deputy of Grouville 's this time round. When the Minister for Treasury and Resources wants to do something