States Meeting Transcript - 18/05/2011

STATES OF JERSEY OFFICIAL REPORT WEDNESDAY, 18th MAY 2011

Deputy P.J. Rondel of St. John:................................................................3

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS..........................3

1. Appointment of the Chairman of the Chairmen's Committee..........................3

1. Connétable J. Gallichan of St. Mary : ....................................................3
2. Deputy M.R.Higgins:....................................................................3
3. Deputy C.F. Labey of Grouville :.........................................................4

PUBLIC BUSINESS - resumption................................................................4

2. Goods and Services Tax: exemption or zero-rating for foodstuffs, domestic energy and fuel (P.36/2011) - resumption........................................................4

2.1 Deputy M. Tadier of St. Brelade:........................................................4

1. Deputy D.J.A. Wimberley of St. Mary:..................................................7
2. Senator S.C. Ferguson:.................................................................10
3. Connétable J.M. Refault of St. Peter:...................................................13
4. Connétable S.A. Yates of St. Martin:...................................................15
5. The Deputy of Grouville :...............................................................16
6. Senator B.E. Shenton:..................................................................18
7. The Connetable of St. Clement:........................................................19
8. Senator F.E. Cohen:....................................................................20
9. Deputy A.K.F. Green of St. Helier:.....................................................21
10. Deputy T.M. Pitman of St. Helier:...................................................22 Senator J.L. Perchard:........................................................................24
11. Deputy K.C. Lewis of St. Saviour:..................................................24
12. Deputy S. Power of St. Brelade:.....................................................25
13. Deputy P.V.F. Le Claire:............................................................27
14. Senator P.F. Routier:................................................................29 Senator J.L. Perchard:........................................................................30
15. Deputy S.Pitman:...................................................................31
16. Senator A.J.H. Maclean:.............................................................32
17. Deputy R.C. Duhamel of St. Saviour:................................................35

LUNCHEON ADJOURNMENT PROPOSED..................................................37

LUNCHEON ADJOURNMENT................................................................37

18. Senator F. du H. Le Gresley:........................................................38
19. Deputy E.J. Noel of St. Lawrence : ..................................................39
20. Connétable M.K. Jackson of St. Brelade : ............................................41
21. Deputy F.J. Hill of St. Martin:.......................................................41
22. Connétable A.S. Crowcroft of St. Helier : ............................................42
23. Deputy I.J. Gorst :....................................................................44
24. Deputy A.E. Pryke of Trinity : .......................................................47

25. Deputy M.R.Higgins:...............................................................47
26. Senator T.A. Le Sueur:..............................................................49
27. Deputy R.G. Le Hérissier:...........................................................52 Mr. T.J. Le Cocq Q.C., H.M. Attorney General: ..............................................53 Senator J.L. Perchard:........................................................................53 Deputy R.G. Le Hérissier:....................................................................54 Deputy J.A.N. Le Fondré:....................................................................54 Deputy M. Tadier : ............................................................................55 Deputy R.G. Le Hérissier:....................................................................55
28. Deputy G.P. Southern : ..............................................................55
29. Deputy A.E. Jeune : ..................................................................61
30. Senator A. Breckon:.................................................................62

STATEMENTS ON A MATTER OF OFFICIAL RESPONSIBILITY........................68

3. The Chairman of the Education and Home Affairs Scrutiny Panel - statement regarding its report with respect to succession planning in the States of Jersey Police. ...........................................................................................69

3.1 Deputy R.G. Le Hérissier (Chairman, Education and Home Affairs Scrutiny Panel):...69

1. Senator S.C. Ferguson:.................................................................69
2. The Deputy of St. Martin:..............................................................70
3. Deputy P.V.F. Le Claire: ...............................................................70
4. Deputy J.B. Fox of St. Helier:..........................................................71
5. The Connétable of St. Brelade:.........................................................71
6. Deputy J.A. Martin:....................................................................71
7. Deputy A.E. Jeune :.....................................................................72

ADJOURNMENT................................................................................72

[9:31]

The Roll was called and the Dean led the Assembly in Prayer. Deputy P.J. Rondel of St. John :

At close of business yesterday, when I asked for close of business, after that it was drawn to my attention something that I had raised to do with the fire training ground was basically incorrect, because the team, led by the Connétable of St. Clement, that went to America unfortunately came back with the best they could on the grounds that the Harbours and Airport Committee of the day, their records were not as complete as they could have been. Hence I would like to withdraw those comments I made about the team, because in fairness to those who went, that is the Connétable , the A.G. (Attorney General), et cetera, it is only fair if they have to go and deal with something and all the facts are not there then they can only do their best with what they have got.

Connétable L. Norman of St. Clement :

Could I just thank the Deputy of St. John for his comments, which I do appreciate and I am sure the Attorney General of the day also appreciates, but just for complete accuracy, I was not part of the negotiating team that went to America. I remained in Jersey working very hard to make sure that they did their job as well as they possibly could.

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS

1. Appointment of the Chairman of the Chairmen's Committee The Bailiff :

Chairman of P.P.C. (Privileges and Procedures Committee), do you wish to proceed with the matter you said you wanted to do about a replacement member on your committee? It might be convenient at this stage.

1. Connétable J. Gallichan of St. Mary :

Thank you, Sir. I am grateful for that. As required by Standing Order 122, I have now consulted with the President of the Chairmen's Committee and I would like to nominate the President, Senator Ferguson, as the representative of the Chairmen's Committee on P.P.C.

The Bailiff :

Is that nomination seconded? [Seconded] Does anyone else wish to nominate any other member of the Chairmen's Committee to be a member of P.P.C.?

2. Deputy M.R. Higgins:

Yes, Sir. He is not in the Chamber at the moment. Deputy Southern , I would like to nominate him for the position.

The Bailiff :

Deputy Southern is a member of the Chairmen's Committee, is he?

Deputy M.R. Higgins:

Yes, Sir, he is.

The Bailiff :

Very well. Is that nomination seconded? [Seconded] Are there any other nominations? The Bailiff :

Are there any other nominations for the vacancy on P.P.C.? No. In that case, there are 2 nominations so there will be a ballot and I invite the ushers to distribute the ballot papers. Members should write on the ballot paper the name of either Senator Ferguson or Deputy Southern .

3. Deputy C.F. Labey of Grouville :

Sir, at this time I wonder if it would be convenient to say that Deputy Paul Le Claire has agreed to join the Economic Affairs Panel, because I was nominated yesterday. The other 2 Deputies, Wimberley and Maçon, were nominated yesterday as well.

The Bailiff :

Do you wish to nominate Deputy Le Claire as a member of the Scrutiny Panel? The Deputy of Grouville :

Yes, Sir.

The Bailiff :

Is that nomination seconded? [Seconded] Does any Member wish to nominate any other Member? I declare that Deputy Le Claire is elected to the Scrutiny Panel.  [Approbation]

Deputy M.R. Higgins:

Sir, could you explain, as there are 2 candidates for this position is it not normal for both candidates to set out ..

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

May I thank the Deputy of Grouville and Deputy Maçon for their kind nomination to the Scrutiny Panel.

The Bailiff :

To answer Deputy Higgins' query, it is only for the chairmanship that a Member speaks. I invite the ushers and the Deputy Viscount to collect the ballot papers. Have all Members returned their ballot papers? I invite the Deputy Viscount and the Attorney General to act as scrutineers.

PUBLIC BUSINESS - resumption

2. Goods and Services Tax: exemption or zero-rating for foodstuffs, domestic energy and fuel (P.36/2011) - resumption

The Bailiff :

Now we return to the debate upon Projet 36, the proposition of Senator Breckon.

2.1 Deputy M. Tadier of St. Brelade :

I will learn next time not to put my light on at 5.20 p.m. or 5.10 p.m. just before the Deputy of St. John. Clearly there has been a lot said over the years to do with G.S.T. (Goods and Services Tax) and to do with exemptions. We have heard that a lot of the arguments will be fairly well rehearsed. So I thought what I am going to do first of all is, rather than listening to States Members, I want to read out a representation I have had in written form. It came from a blog site but it is unusually well written for a blog, although that is not to disparage. I may interject with a little bit of asides during the paragraphs, if that is okay by Members. "The proposals today will see a number of tired arguments rolled out in opposition. Notable among these doubtless we will be told it is essential: (1) to keep it simple, (2) the wealthy will benefit more than the poor, and (3) that there is a better way of helping the poor. Let us deal with there is a better way to help the worst affected. For a moment just let us accept it is true: what is the better way? Which amendment is it that allows us to visit this nirvana? Of course it has not been detailed and there is no option on the Order Paper that the States can vote for. This is an excuse of the witless that need a fig leaf to cover their naked political embarrassment and simply not giving a G.S.T.-free fig for the poorest." The aside: of course Members will be thinking we already do have a system, we have income support, we have the thresholds; we have already tweaked that. I think the point is we know that this is limited. We have already heard from other Members that those who perhaps need the most help in society is not those who are already covered, it is not the ones at the very top who do not really care about G.S.T., who do not care about other forms of taxation because, they have a very large amount of disposable income. Nor is it those at the bottom who, although life is tough for them on a daily basis, they are provided for by our handout State, because perhaps the wages or the job opportunities are not there. These 2 sections are catered for. There is absolutely nothing on the table that caters for what has euphemistically been called middle-Jersey but should be called hardworking, honest people who do not necessarily have to or want to qualify for other benefits. Returning to the comments: "So what about the wealthy benefiting more than the poor? This relies on the argument that the wealthy typically spend more on food, and I suspect fuel, than poorer people. Therefore if you exempt food you are letting the wealthy off more tax. So what? Is it really more important that wealthy people do not benefit from something than enabling the poorest a better chance to afford decent nutrition? On health grounds alone the argument is probably lost but there is, of course, a limit on how much food even the most affluent can consume. The benefit they derive is limited. This argument was noticeably absent when exemptions were made for marine fuel.

[9:45]

Clearly, the biggest boats with the lowest miles per gallon fuel consumption are owned presumably by the wealthiest people who benefit more than small craft owners. Does anybody recall the wealthy benefit the most' argument being deployed at that one? I think consistency clearly is the key here. The marine fuel case also points up the fallacy in the third argument in the list. It clearly did not make the system simpler, just as changing the old 20 per cent tax rate system to a mix of zero, 10 and 20 company taxes was not keeping things simple, was it? Do the keep it simple' proponents really think that this is the overriding concern? Should we simplify the payroll system across the Island by paying everybody the same? That would be a huge admin saving. Why are the simple is essential' campaigners not working on the labyrinthine social security income support forms and system to simplify that? The argument on fuels, of course, is more complex. We need to be doing what we can to reduce fossil fuel consumption. One of the bizarre and deeply inequitable aspects of how utilities are charged locally is that there is a fixed element, so even if you do not use a facility there is a regular charge to pay. This means that on a per unit basis the more frugal pay more per unit consumed. This is upside down. We need to make it cheaper for people to use less and more expensive for high use. We could achieve that from domestic consumers by outlawing fixed charges for utilities and requiring an increase in tariff with increased consumption. As an added side effect, those high consumption households will have added incentives to make energy savings and microgeneration improvements." Just to add a few points of my own to those arguments, which I think are valid, and I was particularly struck by the consistency argument and the "let us keep it simple". It is okay to keep things simple when we want to extract the maximum amount of money from those who are squashed in the middle of the distribution curve, but we know that when it comes to providing tax breaks, perhaps for the wealthiest individuals in society, or when it comes to devising systems which are theoretically designed to keep finance and capital in Jersey, we can make very complex systems which most

States Members, probably myself and perhaps even the Ministers in charge do not truly understand. That is why it takes so long for Europe to go away to analyse the proposals and say: "I do not think this is personal taxation, this is business taxation", et cetera. So the keep it simple' argument simply will not wash. We have to keep it simple presumably when others are trying to help those who are hurting, but when it comes to other matters make it as complicated and as complex as one likes. That argument, I am afraid, does not wash here. I want to combat the other argument, which I think is compelling but not true ultimately, that the money will not come off food. Now, it

certainly will not come off food if we do not vote for it to come off food. That is absolutely true; that is 100 per cent certain. If we do vote for it to come off food that is the only way that it can come off food. So if we want to see food prices come down by 5 per cent or stop going up by an extra 2 per cent then we have to take this off food. I will give an example. I shop at the Co-op, which Senator Shenton may be pleased to hear. I think they provide good value, but I am not here to provide an advert for the Co-op. The point I am making is when I go in on a Friday to buy my piece of fish .. I do go in on Friday and sometimes go in on Wednesday as well, but I like my fresh fish on a Friday. I think it is important to buy your produce daily. But anyway, we have not come here for a micro debate on which is the best day to shop in Jersey. [Laughter] The fish I see, which is normally pre-priced at £3, when I go to the till it is £3.09 that I pay at the moment. That 9 pence is not something that the shopkeeper has decided to put on for the sake of it; it is G.S.T. If G.S.T. is removed that 9 pence would come off. If it is not removed and it goes up to 5 per cent there will be 15 pence on that. That is quite clear. Now, perhaps that may not happen right across the Island but, as we know, that will lead to competition or to price shopping competition. So if, for example, we know that shop X is charging G.S.T. and it is visible, because the prices have not gone down - they may have gone up or whatever - the customer will be aware of that. By a process of what I think is rationalisation, we are trying to abdicate our responsibility as parliamentarians saying: "Actually, the money is not going to come off food." We do not know that. Are we saying that all shopkeepers in Jersey are unscrupulous? Are we saying that they will put their prices up? Of course prices can go up anytime but they can go up with G.S.T. on them as well. In fact, I would argue that it is more likely when people are having to make the price shift upwards to an extra 2 per cent that is the point at which they are more likely to put prices up or to round-up. So we simply must not buy into this argument. It is not our responsibility to predict what shop owners are going to do and say that they will necessarily be tight-fisted, that they will necessarily be unscrupulous. Certainly there is an amount of profit that they will want to make and if that 5 per cent on the price is something they do not have to put there any more there is no even-handed reason to think that they are going to put the prices up just for the sake of it. There is also what I would call the conservative argument; surely it is better to leave the money in people's pockets, it may only seem a paltry amount but we know if you are spending, let us say, £100 a week for a couple, that is £5,000 a year perhaps on shopping, most of which will be food related. That does have an impact and these are people, again, who will not necessarily be benefiting from tax breaks or from benefits. Surely it is better to leave the money in their pocket, let them decide how they want to spend it. We have heard the arguments again from the House that it is very unlikely that the current system we have is efficient, the States are not making the efficiency savings yet that they should be. I am not one who is for small government, I am somebody who is in favour of the right size government, but clearly one has to admit that there will always be efficiencies to be had and the message seems to be going out loud and clear that we do need to change the way we do business. We perhaps do need to reform some aspects of the Civil Service and it seems completely wrong, even in this aspect, to be actually asking for money to be put on food simply to raise an extra £8 million. I have changed that right around slightly, we should not necessarily be thinking about exempting food, we should be perhaps thinking of a default position where we have the chance of not having any G.S.T. on food. By putting G.S.T. on food and on fuel we will be making that extra money but I suggest this is not the right time to do it. We have heard the arguments that middle-Jersey - a term I do not like to use but I think it perhaps does have some poignancy - is really the one that needs the help. Lastly, I would say we have had this line which has been pedalled in the J.E.P. (Jersey Evening Post) that this argument is about head over heart or heart over head. Actually I would say that I am thinking both with my head and my heart. My heart is my head in that sense and the long term implications, I think, if we say today: "No, it is okay to tax food, it is okay to tax fuel, these are the essentials of life." I mean, we already recognise that we have threshold limits for income support and that is because there is an underlying principle that we

all seem to agree with that you do not tax the fundamentals in life, whether it is £10,000 or £11,000 roughly, we accept that is what somebody needs to have a basic existence in Jersey, so we have already made that accommodation, that link, saying that we really should not be taxing the essentials in life. The reason it is a head and a heart decision is because I think the long term implications are that first of all I do not want G.S.T. simply to be the easy option whenever the States, for example, needs extra cash, perhaps because it has not met its targets because it has not shown enough restraint, we just say: "Let us turn up the G.S.T. tap." But we will also turn it up on food and on fuels because the link has not been broken there, and I think those words of Senator Breckon when I went to one of the public meetings was something that struck a chord with me. We have to now break the link between taxing the basics in life - currently proposed at 5 per cent, perhaps going up to 10 per cent, let us hope not - and what is perhaps more luxury items. I have no problem with the consumption tax on Ferraris, on Aston Martins, whatever, on diamond watches; I have no problem with people paying 20 per cent, 10 per cent tax on those items. But I do have a basic problem about people paying on the essentials in life. So for me it is a head and a heart issue. I think I will leave it there, I think the arguments have been made, Members perhaps know how they want to vote, but certainly that is my position, it has not changed and I will be supporting I think both parts of this proposition.

The Bailiff :

Deputy , I do beg your pardon, before asking you to speak can I inform Members of the result of the nominations for the vacant position in P.P.C. The votes cast were as follows: Senator Ferguson 33 votes, Deputy Southern 17 votes. I, therefore, declare that Senator Ferguson is elected to the committee. [Approbation]

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

This debate on G.S.T. has been difficult for me. Exemptions from G.S.T. have become a symbol and if we vote for the exemptions then somehow we have succeeded in making Jersey a fairer

place, and if we vote against the exemptions then somehow we support an unfair society. I do not think it is that simple and later on in my speech I am going to look at what fairness would look like because I do not think that this particular proposition may be the right way. I have real difficulties with supporting the proposition (a) and (b), and I have real difficulties with siding with the Council of Ministers for the reason I have just said; that it makes it look as if one does not believe in fairness. So the difficulties with the proposition have been well put by the Minister for Treasury and Resources really, and also by Deputy Tadier , and I think I find it very difficult to argue with the 3 main points. The first is that the U.K. (United Kingdom) system is barmy, frankly, and to import that system into Jersey is just not a responsible way for us here in this Assembly to go. I am not sure the Minister is right in his assessment of the extra bodies needed in the tax office, but certainly we would be creating a lawyer's paradise with the litigations and the importation of judgment after judgment into our system from over the water. So that is the first problem and it is a real problem. The second one is that there is a more targeted way of helping the less well-off, which is via income support and we do use that and have used that to the tune of more than the charge on food and fuel cost the worse off. So I think that argument too is valid and despite what others have said - or Deputy Tadier in particular has just said - the fact is you get more bangs for your buck if you spend it directly than on this scattergun approach which does give benefits to everyone; an exemption gives benefits to all, whether they can afford the food or not. The third point is that, yes, G.S.T. protection has been given by this House. There is the point about middle-Jersey which I have not quite got my head around, but I think that is covered by my agenda for fairness, which I will come to under why one cannot support the Council of Ministers either on this issue. So why does it keep coming back? Why does this exemption issue keep coming back and why are the public I mean, I have felt it as well, not just in emails but personal conversations - people do feel strongly about this issue. They do think exemptions are the way to go, we should exempt food and, to a lesser extent, I think, fuel. But food is the big one in people's minds and I think what lies behind that is a feeling in the public that we have a very weak commitment to fairness really and

this is their way of saying that.

[10:00]

That is why this keeps coming back with such great public concern attached to it. I just want to set out the reasons why it keeps coming back and Members might want to remember these when they come to vote. The first is the anger about the broken promise. That is still there in the back of people's minds. "This will not go up, I give a categorical assurance that it will not go up." Even in Senator Breckon's proposition that when going back 3 years we see commitments to keeping the rate low, keeping it at 3 per cent: "It will not rise. It will not rise." But more to the point and more memorable is the present Minister for Treasury and Resources' categorical assurance, both to voters and to Members of this House, that the rate would not go up - and it has gone up. There is an anger there about broken promises, there is an effect on cynicism among the public, there is an effect on the amount they believe in their politicians and all that makes that broken promise and other broken promises unforgivable. That is part of the baggage that comes with this proposition, that is part of the feeling around it and why it carries so much political weight. The second is similar, it is the response of the present Chief Minister - then I think the Minister for Treasury and Resources - to the 19,000 signature petition: "I do not care if 100,000 people sign it." Well, what an extraordinary way of going about things. It was dismissive, it suggested a culture of not listening to the concerns which underlay the petition. I think that too is part of the emotional baggage that comes with this proposition. There is the broken promise, there is the dismissive attitude to what the public very loudly said. Thirdly, there is the policy context. Now, the Minister for Treasury and Resources yesterday said: "We care. This is a caring Assembly." I agree that on its better days this Assembly does have a social conscience, but that social conscience which we see sometimes, and we saw in the various measures to protect the worse off from the effects of G.S.T., nevertheless, falls foul of the dogma repeated again and again by the Ministers and their supporters in the Corporate Services Scrutiny Panel who are supposed to be scrutinising and making a critique

of government policy and the Public Accounts Committee. But we get this dogma again and again that there is no money for this and there is no money for that and we must tighten our belts and we cannot afford that and of course that carries through into the Business Plans, which this Assembly ends up voting for. Now, what is the outcome of those votes? What is the outcome of those Business Plan approvals? Well, the outcome is like this: we had to fight for years for the Millennium Town Park. There is a case of something that is good for the heart, literally, good for the soul, it is a symbol of equality and fairness and the wellbeing of thousands of people; we had to fight for years in this Assembly to get that park unencumbered, to come to fruition. The sewage coming through the ceiling at A. and E. (Accident and Emergency): "Oh, well that is not the first time" we were told "it happens every now and again." Now, in another jurisdiction that might be a resigning matter but here we hardly managed a few questions in the House. So how did that happen? That must have been the result of failings in the past to keep up with necessary infrastructure and necessary maintenance. Then, of course, the failure to have a proper Children's Service and proper protection for children and in the end we had the Williamson Report which told us to spend at least £3 million and then annual amounts as well to make up the backlog to put those children's services right, to put right the neglect over decades. That is what our policy is, that is what this belt-tightening actually means. It means no parks, it means sewage through the roof, and it means neglect of our children over decades. I think that part of the underlying force behind this G.S.T. is we want to see those type of issues put right. That is the background, that is the context for this debate. What I would have liked to have seen the Chief Minister say instead of: "I do not care if 100,000 sign the petition, I am not going to listen" what I would have liked him to say is something more along the lines of: "We understand the concern about a fair society which is at the heart of this protest. We will protect the worse off in society and here is a list of what we aim to do." Well, he did not say that, did he, but I would suggest and I would like to hear Ministers and the Chief Minister hopefully respond to this little list of what might make people out there feel that we cared about fairness and went beyond exemptions on G.S.T. which, as I have said, are a pretty inefficient way of helping, but they are a way of helping. So let us look at what a real agenda for

fairness might look like. What the Chief Minister could say, and I would like to hear him say it today, there will be no more permissions for luxury houses and mansions on our precious coastline because the coastline is there for all of us to enjoy. We will bring in a tax on the rising value of land when it is zoned for housing and we will do this because this money is a completely unearned windfall for the lucky landowners or speculators, and we will do this because it is a symbol of our unfair society and we are trying to make it better. Our policy will be to keep the population steady. Why, because this will stop the treadmill of endlessly rising demand for accommodation which creates the scarcity, which creates the vastly inflated cost of all accommodation and we are determined to tackle this. We will have a major inquiry by the J.C.R.A. (Jersey Competition Regulatory Authority) into the cost of importing goods into the Island so that we can get to the bottom of why it is that food costs - as we saw from the Senator's proposition - between 25 and 30 per cent more here than it does in the U.K., and is that properly explained by the transport costs or is there something else going on. I have not heard that inquiry announced but it will be nice to have that commitment. We will get some more tax revenue from the 1(1)(k)s and the finance industry, I know some little bits of work are being done in this area but we should say that we have that commitment, they can afford to pay a little bit more and we know that they would not all fly away the next day because Jersey has many advantages that they would not want to be without. We have faith in the attractiveness of our Island and we will take the necessary steps to increase that attractiveness and to preserve that attractiveness so that Jersey remains a wonderful place to live. We will ensure that income support and similar schemes to help the lower paid are good enough and are working, and we will ensure that we have a genuinely progressive tax system, and we will not increase G.S.T. above its present level of 5 per cent. So if the Council of Ministers subscribed to an agenda for fairness like that I think the public might be willing to listen to the argument that exemptions on G.S.T. are - certainly in the form of importing them from the U.K. - a bad way to go, that there are better ways to go and those kinds of policies would convince the public that we did care about treating people fairly. If we get those assurances then I will be happy to vote against this proposition but if I do not then I will not. Now, turning to fuel, the first general point is that domestic fuel went up 26 per cent recently, on its own, without G.S.T., with or without that is the trend and it is not the last time that fuel will increase in price. So the 5 per cent is extra paying but the issue is that heating costs will rise anyway regardless and this Assembly has to grasp that fact that taking off 5 per cent will, in the last analysis, not make any difference because the next price rise will swallow the 5 per cent and more. So the right way to go is to make the homes of everyone cheaper to heat and the commitment that we would need to hear from the Council of Minister is, yes, we will create a scheme for insulating all our homes, we have made a start with those on income support and in the Westfield Health Scheme, but when the Minister for Planning and Environment last made comments on this matter only 23 per cent of those eligible have had their homes treated. We will be absolutely determined to reach all those householders who are eligible, plus all community buildings and then all homes in the Island with energy efficiency measures.

That is what I would like to hear, that is what we should be hearing if we genuinely cared about the poor and their heating bills and, indeed, the heating bills of all Islanders going forward. But will we hear these commitments from the Council of Ministers? Will we hear sensible, progressive measures to tackle the real issues? So that is as far as I can go, I want to hear those commitments otherwise obviously I cannot vote against this. I am very reluctant to vote for it so I shall probably end up abstaining unless the Council of Ministers come across with some real commitments. In conclusion, a suggestion on the side really - I do not know whether this does have legs - and that is that somebody mentioned healthy eating. I think the Senator when proposing talked about the advantages of fresh food and so on. Is there a way of using the tax system to tax imported food and not locally grown, locally produced food? That would help the agenda of the Minister for Economic Development, it would certainly help the Health agenda, and if it is possible then we should look at that. It would be a way of promoting local produce, it would be a way of promoting fresh, and it might be more feasible and more practical than what is on the table today. So, in conclusion, I would like to see not a States that cares, because that suggests some kind of catching- up process, but a States that is fair in the first place.

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

Can I ask a point of clarification of the speaker, is he suggesting that healthy food that is imported should not receive the same treatment as healthy local food?

The Deputy of St. Mary :

No, you have to be simple about this. What I am saying is that if you have a system which discriminates against imported food, that will catch all the tins and all the pre-packed pizzas and all the processed food, as well as obviously fresh imported food, but it does discriminate in favour of local produce and that will change the environment gradually towards less export and more production for local consumption as well, I think that would be a side effect. There are not many processors on the Island so the inevitable effect is it gives an advantage to fresh foods.

2. Senator S.C. Ferguson:

This is a simple decision. Deputy Tadier talked about the well-worn old argument being brought out, but I suppose the old arguments are still the best. Do you want to benefit a system which is to the benefit of the extremely rich and the extremely needy, or do you want a system where benefits can be targeted at those who need it most? Now, apart from some misunderstanding of the Corporate Services Scrutiny Panel's report on the fiscal strategy, which I very much regret and which we have highlighted in our comments on the proposition, the thing that bothers me about the proposition is that it falls into the same trap as the Fiscal Strategy Review. It is adopting a piecemeal approach without considering the overall implications. Our report said that we recognised that the October F.S.R. (Fiscal Strategy Review) was to meet a particular situation, but we recommended - in fact we specified - that there should be no more increases in taxes of any sort until States spending is reined-in. We also want an overall fiscal strategy and a fiscal strategy covering expenditure, economic growth plan and tax.

[10:15]

But, in particular, with a complete review of all tax, direct, indirect, income, consumption and property taxes, in considering the social effects and this is in progress. But the other thing that bothers me is that the Senator has not said where he will find the additional income. He says: "I believe this is recoverable in other areas of the tax system." Well, yes, the Deputy of St. John has made a few comments about this, which I think do point out areas that we should be looking at. But the real problem with this approach - a typical States approach, if I may say so - is that we are fiddling with the system before we have reviewed it, so we end up with a real muddle of a situation and nothing gets accomplished. The Senator has quoted the second of the reports by the Scrutiny Panels, which was some 6 years ago and much has changed in the 6 years. In fact, Australia is now looking for ways to simplify their system and reduce the administration and compliance costs. It sounds like a good system to me that, that they need to start looking at ways to reduce the administration costs. But by way of contrast, Singapore - with no exemptions - has been able to ensure that those needing assistance, the low income and the pensioners, can be targeted for benefits. This appears to be a recent move so I wonder if they happen to have copied us. Most of our businesses are small businesses who have already had to spend considerable amounts of money updating their systems for G.S.T. Are we going to inflict another substantial expenditure on them? When G.S.T. came in there were extra allowances included in the tax allowances to compensate the less well-off. Some of these were brought by the then Council of Ministers and some were proposed by Deputy Le Fondré and I supported him, and this has made changes to the distribution of the tax take. You can see the system beginning to take effect. In 2008, 18 per cent of taxpayers paid 59 per cent of the income tax collected; 53 per cent of taxpayers paid 41 per cent of the tax; and 29 per cent paid no tax at all. In 2009, which are the latest figures that I have been able to obtain, for the financial year 2009, 15 per cent of taxpayers paid 54 per cent of the tax collected; 55 per cent paid at the marginal rate; and 31 per cent paid no tax at all. In other words, people at the margin, where the tax hits hardest, are falling into a lower tax band. In actual fact, the amount paid on average per person in the 20 per cent band has increased from £14,000 to £17,000. But at the same time nearly 700 taxpayers have dropped into the marginal rate band and nearly 900 have dropped from the marginal band into the no tax paid band. Members should remember that a married man with 2 children and a mortgage pays no tax until just over £40,000 a year, and what is more the marginal rate extends right up to over £70,000 a year. In other words, the measures to reduce the burden on middle-Jersey and the less well-off to compensate for G.S.T. are working. There are other factors but the main reasoning remains. Now, the G.S.T. bonus - as has been said - is a targeted benefit payable to all people who are not on income support and do not pay any income tax. I would say that if any members of the public who are listening have not claimed it then they should get down to social security, it is a simple 3-line form and only takes a couple of minutes. But ..

Deputy I.J. Gorst of St. Clement :

Would the Senator give way, because I do not want her to be inadvertently giving information which is not correct. She is right that for the previous 3 years people in the category that she has explained have been able to claim the G.S.T. bonus which was renamed the food cost bonus. As the Senator will be aware, it is a 3-year piece of legislation and I have down for debate at the next States sitting a renewal of that. So at this current point in time that will not be available until at the next States sitting - dependent obviously on how the Assembly decides today - we will be debating that and after that then they will be entitled to come down and claim that in the way that she outlined. So we just need to make sure that people do not go and do that today because they will not be able to do that until after the next States sitting.

Senator S.C. Ferguson:

I thank the Minister for his correction. Because it was quite clear at Senator Breckon's meeting on Friday at Communicare that the G.S.T. bonus message was not getting through to the population. The Senator also quoted the case of the pensioner couple paying something around £300 in G.S.T. and I have presumed that this is not all food because that would assume that a pensioner couple is paying about £10,000 a year in food. If you reckon that about half of that is food - about £4,500 to £5,000 - then that is G.S.T. of around £150. The Senator has on occasion mentioned that - I implied, I may have misunderstood that and perhaps he will advise us in his summing up - but he has maintained that I.T.I.S. (Income Tax Instalment Scheme) is not a tax, it is a payment mechanism. It is effectively our own version of P.A.Y.E. (Pay As You Earn) and it has been brought in to spread an individual's tax burden over the year rather than having to find a large sum at the end of the year which people found difficult. It is making life easier for the taxpayer. Now, I may be corrected by the Minister for Social Security but I understand that G.S.T. is taken into account in the current income support payments. Members will talk of G.S.T. being a regressive tax. I would suggest that regression is a theory and cash is a fact and a targeted benefit is cash. A simple system means there is no evasion, no avoidance, no escaping the tax and it means that instead of spending money on administration we have got spare cash to ensure that extra benefits can be targeted at those finding it most difficult to cope. Others have spoken of the complexities of the U.K. system. Currently there is a large case brewing on whether hot food eaten off the premises is zero-rated or standard-rated. Can you imagine the complexity for the small takeaways we have in Jersey? Take the excellent bacon rolls which you buy on the Albert Quay, if you eat them standing up they would be zero-rated, but if you sit at the tables they would be standard-rated. If you go off and eat them in your car are they zero-rated or standard-rated I wonder. I think the situation has been exacerbated by the fact that the original case heard by the European Court was apparently brought by a Mr. Manfred Bog and this has enabled a number of the more imaginative members of the media to come out with a number of interesting headlines. Now, if we look at other

countries, Singapore - one of our main offshore competitors - appears to have copied us with their version of the G.S.T. bonus, they have also kept their G.S.T. at a low level. Australians only exempt fresh, unprocessed food from G.S.T. but, as I have said, they are looking at ways of reducing compliance and administration costs. So can we really think that they are finding their system totally satisfactory? Furthermore, the O.E. C.D . (Organisation for Economic Co-operation and Development) have told the U.K. that they would be better to set the V.A.T. (Value Added Tax) rate at 17.5 per cent and remove the exemptions on food and fuel. Does this proposal make economic sense? We are looking for economic growth, does reducing consumption taxes make that sense? According to the O.E. C.D ., no. Their research emphasises that there is a hierarchy of taxes, the top ones which encourage economic growth and the bottom ones impede economic growth. From the O.E. C.D .  research,  income taxes and  corporate taxes  impede economic growth  and consumption and property taxes encourage economic growth, or are less detrimental to economic growth is perhaps the context. This is why our Fiscal Strategy Report recommended an overall review of taxation which is underway. Then there is the common sense, if we bring in these exemptions how do we make up the lost income? More income tax, but that will retard economic growth. Does it make economic sense? As it happens I would like to look at reducing income tax but we cannot do that at this particular moment in time, we have to make sure that we have the C.S.R. savings nicely tucked-up in our back pocket first. It also seems to me that Members do not perhaps understand the economics of corporation tax. Corporations do not pay tax, the tax is effectively paid by shareholders, employees and customers. In other words, high corporate taxes reduce dividends, reduce employees' wages and increase prices to the customer. Then there is the question of why prices are rising. The price rises that we are seeing are not just in Jersey, they are worldwide and I am concerned that the proposition makes no attempt to understand why prices are rising and has not looked at other ways to ameliorate rises. Now, if we are looking at fuel the chairman of Exxon Mobil was at a United States Senate hearing last week and said that the price of

oil based purely on supply and demand should be in the region of 60 dollars to 70 dollars a barrel. The reason it is above 100 dollars a barrel - actually it is not above 100 dollars, yesterday it closed at 97 dollars - the chairman explained that the price is due to the oil majors using futures contracts to lock-in current high prices and speculation that is engineered by the high frequency trading of quantitative hedge funds. The cost of producing a barrel of oil is currently 11 dollars.

[10:30]

Now, the Senator - our Senator, not a United States one - talked of the Jersey cost of fuel being something like £5.09 or thereabouts a gallon. Now in the U.K. - which I checked yesterday - they are paying something in the order of £8.64 a gallon. The reduction in oil prices that has been going on - the 97 dollars - I do not think that these prices are properly being passed on to the consumer and I am, therefore, very pleased to see the J.C.R.A. looking at the costs of oil and I wonder if the Senator can tell us in his summing up whether he has - as the Chairman of the Consumer Council - been in touch with them to express his concerns. I am glad to hear, in fact, that the Minister for Treasury and Resources may be reviewing his ideas on fuel Impôts it he does not I feel an amendment coming on because the Impôts has been used as a cash cow and possibly as a behavioural changer and I have got news for him, the Impôts of oil by litres have fallen by 5.6 per cent over the past 10 years while the number of cars have risen by 26 per cent, which seems to me to demonstrate that the market works. As the price rises people by more fuel efficient cars and probably use them less. The same sort of arguments with food costs, we have a situation where just over 6 per cent of the total worldwide food crop is being converted into biofuel, 41 per cent of that by the United States. So this has obviously boosted the increased cost of food. We import most of our food from the U.K. and the cost of that is increased by the common agricultural policy which increases prices by about £400 a household in the U.K., the E.U. (European Union) subsidies on renewable energy which increase prices on processed food, current estimates are about £300 a year, and of course U.K. supermarkets have economies of scale and very often use staple foods as loss- leaders. The current U.K. policy on energy, which was announced a couple of days ago, will significantly increase the cost of electricity in the U.K. which will further increase the price of processed food so the sort of increases are going to be quite significant and the inflationary component of price rises has been boosted by the quantitative easing in the U.K. So should we not be encouraging supermarkets to buy from other sources, and why has the Consumer Council not taken up the investigation and why has this not been put on the agenda of the British-Irish Council? I happen to agree with the Deputy of St. Mary that the J.C.R.A. need to look at this as well, so a lot of these factors are totally out of our hands and we need to get in there with people like the British- Irish Council and just start kicking back. To get back to the point of this debate, I ask again, do you want a system which can be used to give a benefit payable to everyone, the extremely rich and the extremely needy, or do you want a system where benefits can be targeted at those who need it most? Middle-Jersey has been assisted by the higher tax allowances and our current system looks after the needy in society. Let us emulate Singapore, not the U.K.

3. Connétable J.M. Refault of St. Peter :

This is a very seductive and enticing proposition and it appeals to our social conscience in looking after low wage earners, pensioners and income support recipients. However, I will try and demonstrate that not only is it unlikely to help but also that it does not help those that Senator Breckon hopes it would. It is only when you drill-down and fully analyse the impact that you start to realise that in all probability if it helps anyone then the proposition will aid those on higher incomes to a greater extent than those it seeks to protect. This includes those that are high energy users with multiple-room central heating, swimming pools, home theatres, game rooms, et cetera, will be among the most grateful for the reduction to the cost of their lifestyles. Many of the more well-off have worked hard for the lifestyle they enjoy but I believe the job of this Government is to concentrate our support on those that are least well-off and need our support the most. I will not criticise the sentiments of Senator Breckon's proposition in the slightest, but I feel that it is misguided and does not realise its intentions. I think that we have already acted several times over to protect the vulnerable in our society and that this proposition adds nothing, although taken at face value it may be seen by some as being helpful. Let us look at some of the detail of what Senator Breckon is proposing. While I acknowledge that we are required to decide on the wording of the proposition itself, there is the report that makes the arguments that gives Members the information that allows them to make judgments, judgments that are based on facts and examples that lead us to a decision, and it is the report to this proposition that led me to question some of the facts contained within it. Firstly I acknowledge that the proposition will have been compiled at a different time to my short analysis of the costs shown in the examples contained in the report. I discovered that on doing a search on mysupermarket.com that the actual prices being charged by a mainstream supermarket such as Sainsburys, Tesco, Asda and others are somewhat higher than those quoted in the report, reducing the differentials claimed. This led me to also look at some

other examples of support for those in receipt of income support and the U.K. equivalence. It is not an exact science in determining the probable annual cost per household of G.S.T. on food and energy as many other factors make up the average cost, such as toiletries, clothing, cleaning materials and even optional spending such as pet foods and an occasional meal out on a special occasion for those fortunate or careful enough to be able to afford them. However, Jersey frontloads income support and other measures to help low wage earners to compensate for G.S.T. on all purchases and services. This prompted me to look at an example and I took the example of a single parent with one child of 7 years old and no other means of support or income and requiring a 2-bedroom flat. Such a person in the U.K. would appear to receive in pure support alone £8,560 a year. That is made up of income support of £67.50, child tax credit of £59.36, council tax benefit of £17.46 and child benefit of £20.30 grossing at £164.62. But to create a level playing field I've added into that, with the help of Social Security, a £200 a week rental charge for a 2-bedroom flat being what would be a Jersey equivalent. That brings that U.K. example up to - including the

Jersey equivalent rental - £18,900. Then I looked at the same person in Jersey in the same conditions and in Jersey that person would be getting £22,717 - nigh on £4,000 per year more. This is an example to me how generous we are to our income support and I do not decry that in any way, it is right and just that we do that and in many ways I would be far more likely to be supporting a proposition from Senator Breckon that says something along the lines: "We should bring forward measures to increase the support to income support and marginal wage earners to compensate for the increase of G.S.T." because then it would targeted, timely and permanent. Members can test my figures themselves on those examples by looking on the Social Security self-assessment tool on their website which I must say is very excellent. The directgov.co.uk one for the U.K. element was somewhat more difficult and I had to enlist the help of Social Security on that one to make sure my figures were correct. So I believe we have already recognised that G.S.T. impacts adversely on some of the worst off in our society and have acted responsibly and compensated them through our benefit system, possibly to the extent that we have done so several times over. The comments of the Minister for Treasury and Resources contained in the breakdown of support of at least £12 million a year and I will not repeat what Members can read for themselves in his comments. This is a far more sensible approach, in my view, than designing a complex tax system that affects different individuals in different ways. Our approach demonstrates balanced care and responsible government and a government that is aware of the needs of its people by giving them in advance to G.S.T. requirements. I would like to talk briefly now about compliance costs. Many of the arguments against Senator Breckon's proposition have focused on the additional administration burden and cost to the States. I would like to elaborate a little on the potential cost to business, particularly small business, at a time when we need to be fostering an environment where those business can recover, grow and thrive. I am going to use the words of tax guru Cedric Sandford, who found that across a sample of U.K. industry V.A.T. compliance costs for business are some 4 per cent of the revenues raised, a large sum for any business to bear. He also laid out 3 separate elements to the cost of their compliance: fiscal costs, that is the costs associated in establishing and registering a company, employee costs of running the day-to-day V.A.T. accounting, the cost of expertise to understand and keep up with the changes in policies, the cost of submitting V.A.T. returns, the cost of external accountants to verify their figures. Secondly, time costs: the time costs of senior management in overseeing the function, but in reality in a small business that is a very scarce resource. Third, the psychological cost: the worry about the onus that is squarely put on business to conduct their V.A.T.s properly with financial and even criminal sanctions for failing to do so. Having established what the V.A.T. compliance burden on most businesses is and which businesses does it fall most heavily, there is no doubt that it is the very small businesses just above the V.A.T./G.S.T. threshold who bear the heaviest burden. For example, a National Audit Office study in 1994 found that in the smallest businesses the cost of compliance was some 20 per cent of the tax paid and that cost will have to be met by higher pre-profit costs put on the products or services for sale. I think the important point there is, there was an argument put earlier on that the only way to reduce the cost of food is not to put the G.S.T. on it, I note by not putting the cost on it, it would bring the food cost down. The cost of administering the system will require the costs of the business administration to be put on the food, so it would come out - in my view - as net, no

benefit at all.

Deputy R.G. Le Hérissier:

I wonder if can ask a point of clarification. Given that the Jersey threshold is enormously higher than the U.K. threshold, are those figures just quoted based upon the U.K. threshold or an analysis of the Jersey small business threshold?

The Connétable of St. Peter :

Those figures are based on the U.K. threshold. Coming back on to the study about putting the costs on top of the base costs of the items before they are put on for sale, this is a critically important point. It is highly probably that if this proposition were to be successful, the very Islanders that Senator Breckon is seeking to protect will see no benefit and possibly even a worsening of their circumstances. Businesses will protect themselves through higher prices to cover their

administration costs. It is a fact of life that at this time when profit margins are squeezed this is how they will behave and it would be naïve to expect them to act in any other way. The Jersey Chamber of Commerce is alive to the position in the U.K. and in a recent communication on the proposed reduction of G.S.T. on some items commented: "It is our view that G.S.T. should be an across the board tax and there should be minimal exemptions to ease the burden on businesses that act as unpaid tax collectors on behalf of the Government." I agree with that view, but only if we then compensate those who need help the most. We have clearly demonstrated that we do this. In summary, this proposition is unlikely to help anyone. If it does it is not the least well-off that will be celebrating the most today if it were to be approved. We already help those that need our help the most and I encourage Members to reject this proposition and continue to support the less well- off by not bringing in a system that will undoubtedly leave them even less well-off. While the seductive nature of this proposition is very attractive, our parents, ourselves and our children will suffer from the failure of this Chamber to make the right decisions, decisions based on facts and irrefutable evidence, decisions made with the insight of the ramifications of making the wrong decision. It may be tempting for a Member to vote a particular way especially, as we are so often reminded lately, that this is an election year. But it is never the wrong time to make the right decision. Thank you.

The Deputy of St. Mary :

May I ask for a point of clarification from the speaker? The speaker researched the fact that in Jersey people who receive income support - and he quotes a specific example - would get £4,000 more on roughly £20,000, so about 20 per cent more.

[10:45]

Did the speaker also research the extra cost of living in Jersey and relate that to the 20 per cent more that they would get in Jersey?

The Connétable of St. Peter :

I looked at the differences in the cost of the basic items included in the report to the proposition and found that in most of the examples in the report the U.K. equivalent I found - by looking on mysupermarket.com - were higher than the figures quoted in the report. So it closes the margins quite considerably. But those are a very selective, small sample of goods, it was not on what I would call a normal weekly shop example of goods which would have been probably more representative, and I did not drill-down to that detail. With regard to the housing costs in the U.K., the housing costs would be generally far less than I have added in to the U.K. component, for example £200 a week for a 2-bedroom flat in the U.K., you would probably have to be living somewhere on Oxford Street in London effectively to pay that. In many other places you would probably be paying less than £100, so I have gone for worst case scenario in the U.K. example to bring it up closer to the Jersey one, where more often than not it will be quite a bigger difference, £4,000 being the minimum. Hopefully that helps.

Senator A. Breckon:

I wonder if I may give a point of clarification in case a confusion occurs over that. The statistics I have quoted are from the Jersey Statistics Unit, they are not my things so in no way are they skewed in any way, they are independently done.

The Connétable of St. Peter :

I acknowledge that, thank you.

4. Connétable S.A. Yates of St. Martin :

I will try and remember what I was going to say now because I was quite clear in my mind about an hour ago. I fear that if this proposition is adopted that the income support recipients will suffer because their G.S.T. component must be, I would think, removed from their grants and also the G.S.T. bonus which is paid to non taxpayers and non income support recipients would be removed also. So I think the vulnerable section of our population will suffer. I wanted to comment a couple of words on the speech that Deputy Martin made yesterday, which was very relevant, and in fact she was concentrating on the effects on middle Jersey, and this is absolutely relevant because about 3 weeks ago I received a letter from the oil company which supplies us with heating oil and they said that they wanted to put up my standing order by £40 a month. Well, I thought: "Wow, that is a bit much because that represents a 50 per cent increase." We did have a cold winter but it was a bit too much for me to stomach, I said: "No, I am not going to do that, here is the balance I owe you from this winter, kindly reassess me." So that is a factor of I cannot afford that amount quite frankly, to pay that amount every month so, yes, I think this  belt tightening  is affecting me personally. I am middle-Jersey and I think it must be affecting everybody. So I do believe that I am probably old enough to have lived through probably the greatest credit crunch, or the Second

World War, which was not a credit crunch, but it was certainly hard times and I have lived through that and it was hard times, definitely very tight belt-tightening. I mean, if you have not lived through it you would not comprehend what it was like, I mean, you would save bits of gum paper from the edge of postage stamps in order to use an envelope twice. If you had a paper clip you did not send it off with your letter, you kept it because you could not buy a paper clip, and that is hard times. Rationing, income tax going up an incredible amount, and we were very, very short of everything and I am talking about really, really hard times. I do not believe that this current run of hard times is going to last for ever. I think basically we are talking in terms of the re-growth of our economy, I think we are maybe - as was yesterday - just showing the first fruits of re-growth. I think probably we have got to hang-on in there for another 3, 4, 5 years. I would urge Members to keep their belts tight, hang on in there and accept 5 per cent as has been agreed, 5 per cent was passed some time last year and I should say to the Minister that judging by the comments around this side of the Chamber, 5 per cent, that is it because you will not get any more and I think, quite frankly, stick with 5 per cent, keep it simple. I hesitate because if this proposition is carried I would quite expect to have a proposition from the Council of Ministers to put it up to 6 or 7 per cent and once that has done we have broken the magic 5 per cent because, quite frankly, we want to stay at 5 per cent and not a step further. I would emphasise that we must stick at a low percentage of G.S.T. and keep it simple and please vote against this proposition.

5. The Deputy of Grouville :

It seems quite a popular acronym: keep it simple. Do we introduce a very complex system riddled with court cases and be a burden on small companies, possibly putting them out of business? Or do we keep it simple and tax everybody equally? Well, put like that it is obvious what we do, but if only it was that simple. Of course it is not that simple, we all know it is not that simple because by taxing everybody equally what we are doing is creating a welfare state. We are saying: "If you are struggling, if you are on low income, if you cannot manage in this Island then, as Senator Ferguson said, you just trot down to Social Security, fill out another very, very simple 3-page form and go and get your handout." Well, I know a lot of people in Jersey that simply will not do that. There are some that do and they are possibly the ones that are targeted, we are all paying for those. But there are an awful lot of people in Jersey that will not fill out a simple 3-page form and join the queue and get into this welfare state that we are trying to create because we want to keep a very simple system. Now, it seems to me that it is irking a lot of people that by introducing exemptions we may be benefiting the better off. We may be benefiting the people with swimming pools who are heating their swimming pools, goodness me, we cannot possibly do that. Well if Members find that scenario so irksome then find a means of taxing them. Different systems are quoted to us like Singapore, New Zealand, Australia, these are held up: "Oh, look what they have got, they have got a flat rate across the board." But what is missing in that analysis is what income tax they pay. Their income tax is not flat and across the board so if we are going to compare different systems, different jurisdictions ..

The Bailiff

I am sorry, Deputy , we have gone inquorate. I will ask the usher to bring Members back. Deputy M.R. Higgins:

Is it possible for us to have the appel so we can show people who do care about this debate? The Bailiff :

Yes, well Standing Orders give us a certain amount of time but unless we go quorate immediately then otherwise I will call for an appel. Very well, we are now quorate again. So please continue then, Deputy .

The Deputy of Grouville :

I was speaking about different jurisdictions and if we are going to make comparisons I think we ought to make comparisons with their entire tax system, not just the G.S.T. element of it because I think that would paint a very different picture for Members. So when we go along with this keep it simple, send people down to Social Security to engage in the welfare state with their handouts - as Deputy Martin put yesterday - what about the middle-earners, what about those who are struggling, what about those who are struggling with mortgages that they get for an entire lifetime, they are struggling with school fees, they pay their dues? What about those people? Those people are being squeezed and there is no system in place for them. The only option those people have - those just above the threshold for help - the only option they have left to them is to get the boat in the morning basically, and I know an awful lot of people who are doing just that because they are finding this Island so expensive to live in, and it just seems to me that nobody particularly cares. So by keeping it simple we create a welfare state, everyone trots down to Social Security, those that do not, well, tough, they can just continue to pay their dues and struggle. Now, this Assembly has been split, this debate has come forward many times, I have brought it forward twice and it is going to be a very close run thing today, and it is going to keep on coming back and the Treasury need to be asking themselves: "Why is this topic going to be brought back time and time again?" The Minister for Treasury and Resources asked me yesterday, because not all of us come to this Chamber with our minds totally and utterly made up, we think we know how we are going to vote but I think if our minds were so utterly closed it would make this Chamber redundant, so no matter what your principles you do allow an element to be swayed or persuaded to change your mind. The Minister for Treasury and Resources said to me yesterday: "Is there anything I can do to make you change your mind on this because having brought it forward to this proposition twice yourself you are probably going to be voting for exemptions?" I would say to him: "I would love to be voting for a simple, across the board system." I do not believe - unlike the last speaker - that there is a magic number of 5 per cent, to me the magic number could have been 3 per cent but Treasury feel that we need the money so we have turned it up to 5 per cent, as we will do again and again and again. The Minister for Treasury and Resources is shaking his head, but he shook his head last time, did he not, so let us not get fooled by that. So is there anything that he can do to make me change my mind? Well, yes, there is. In order to keep this simple and vote for a very persuasive across the board system I would like to see some fairness or an attempt that there is some fairness of taxing people in this Island, because I am afraid there is not. When we have no attempts whatsoever - and I remember this point being brought up in 2004 - no attempts whatsoever to bring forward land value tax, so somebody gets their land rezoned, overnight they have won the jackpot, no tax payable. Foreign-owned companies, now, I brought this amendment to the budget last year, okay, and I am prepared to wait, the Minister for Treasury and Resources said: "We will definitely

be bringing something in this year for this year's budget." [11:00]

Well this is such a closely guarded secret, surely something ought to be on the table now, we ought to be celebrating the fact that we are going to tax foreign-owned companies and then there would be some fairness. But there is not, I have not seen anything and I live in hope that there is going to be something tabled very, very soon. So, yes, there is something he could do, he can start to tax and look at other mechanisms and when all of those have been exhausted - even if the system is not totally and utterly fair - people would see that there is some attempt to make it fair and then if we really, really then have to raise taxes, have to put an extra 2 per cent on G.S.T. I think we would understand because all other measures would have been exhausted. That has not happened and if that were to happen that is what would persuade my mind. I cannot agree to taxing basics when there are all these other options. Okay, very, very complex but, nonetheless, there are other options that can be explored, can be tabled [Approbation] and we should be doing those now before we tax life's basics. It is as simple as that. That is what will keep it simple.

6. Senator B.E. Shenton:

I am not going to speak too long on this subject, simply because I think all the arguments have been well rehearsed. Some Members - Senator Ozouf and Senator Ferguson - mentioned about oil and the fact that we should take comfort from the fact that the J.C.R.A. are going to look at it, as if some sort of miracle will happen. Well I just hope that the oil companies do not blame the high rent that they have to pay to the States as one of the reasons for the high price of oil, because the chairman of the J.C.R.A. will have to have a serious word with himself when he gets appointed as head of Property Holdings or the States Development Company. But we will have to wait and see how that one goes. It has been quite interesting in the Shenton household of late because my brother is the tax adviser to the I.O.D. (Institute of Directors) and he has taken a completely different stance to me on this. I made an election promise about not taxing food and he is in Greece at the moment - the country not the musical [Laughter] - and he has asked me to text him the result of the debate when it comes through. Now, he is obviously a tax accountant and he can see all the benefits of keeping a simple system. He also obviously is quite keen on getting people on to income support and increasing the benefit culture and making people go cap in hand, so this is an aspect of the I.O.D. I was not aware of and being a member it is quite revealing to find that they are quite so keen on people going off and claiming benefits. But, there you go, that is life. The arguments in the past have always been: "Keep it simple, stupid." I think it was Deputy Power who came up with this phrase in one of the previous debates, if we keep it simple then we will stay at 3 per cent, is what the argument was and they used the term "keep it simple, stupid" as if we were all a bit stupid by arguing for exemptions for food. But I think what most of us in the House in those debates did argue was the fact that it was not going to stay at 3 per cent and I think the argument was: "Actually we are not being stupid, it is not going to stay at 3 per cent, it is going to go up and it is morally wrong and just plain wrong to tax food." So the I.O.D. and the Chamber of Commerce, they are still coming up with this keep it simple, stupid, and when it goes up to 7 per cent they will probably still come up with it and 10 per cent and whatever. Then one day they will just sit down and think: "Well it is us that has been a bit stupid because we thought that we could keep it at 3 per cent and obviously that is not possible." So I think that the ones being stupid are not the ones looking to exempt food, I think it is the ones that believe that G.S.T. will stay at 5 per cent. I think the other thing is about targeting. People have talked about targeting, so I was sort of thinking to myself, well say we had 2 people go to a local quality supermarket and they have got £20 to spend and there are 2 people in the queue, one is a couple of pensioners, reasonable income, middle Jersey, not claiming benefits - much to the disappointment of the Chamber of Commerce and the I.O.D. and they have got £20 and their basket consists of Jersey butter, Jersey bread, a nice bit of Jersey lamb, Jersey milk, Jersey vegetables, a Jersey salad and a little bit of

Jersey local fish and that comes to £20, because they have shopped well. [Laughter] Senator F.E. Cohen:

Sir, I am not sure when the Senator last shopped but he seems to be out of touch. [Laughter] Senator T.J. Le Main:

Could I advise the Senator that Jersey butter in the Co-op 3 weeks ago was 20 pence more expensive than Waitrose? [Laughter]

Senator B.E. Shenton:

Sir, I cannot answer that without being accused of being biased. So, we have got the local couple with their basket of local produce and then behind them in the queue is a nanny that is working for a very well-paid individual that has been sent off to do some shopping to fill up the treats cupboard for the kids and this, that and the other, and her basket consists of imported sorbet, imported Arctic roll, imported chocolate bars, imported milkshake, imported crisps, some wine and some gourmet cat food for their cat [Laughter], all favourites. Her shopping bill comes to £20 as well, so they both spent £20. Now, under Senator Breckon's proposal from 1st January the nanny's shopping basket will still cost £20, because those will still all be subject to G.S.T. However, the basket of the pensioners that have bought  local, their  basket will go down to £19, so they will have a £1 reduction in their basket because they will not pay any G.S.T. on any of those goods. I think that is what targeting is all about and I think it is also spreading the benefit across the whole of middle Jersey. So, I am going to support this and I hope other Members will do likewise, but I do think most people have made their minds up and that is why I am keeping my speech much shorter than previous ones, thank you.

Deputy A.E. Jeune of St. Brelade :

Excuse me, Sir, may I ask a point of clarity from the previous speaker? Does he believe that the family with the nanny only purchase those particular items and that they are not likely to buy the same items as the previous shopper who was a pensioner?

The Bailiff :

I am not entirely sure that is a point of clarification. Senator B.E. Shenton:

I will say that a couple of speakers have alluded to the fact that more well-off people spend a lot more money on basic items of food whereas in fact that is not the case. A very rich person will not eat 5 loaves of bread and 10 dozen eggs just because they are well-off. People tend to eat the same amount of basic goods.

7. The Connetable of St. Clement :

I am sure we are all grateful for that contribution from the Director of the Caring Sharing Co-op who I understand is a major food retailer, and there was a time in this House when we used to declare such interests and perhaps such courtesies will return. But, to the disappointment of many and despite very many requests, I am not going to repeat the rum baba speech which I gave on the last 2 occasions, and I know that will be particularly disappointing to Deputy Maçon and Senator Ozouf but I hope Members who recall it will take it as read and those who cannot recall it I can provide a C.D . (Compact Disc) afterwards. [Laughter] But nevertheless, there are one or 2 things which I do want to say, and it was really Deputy Tadier who inspired me. That does not very often happen but on this occasion he did inspire me and what I think he really showed, if Members analyse what he said this morning, is that we should see the folly of this proposition. We should see the inappropriateness of this proposition. We should see how well-intentioned it is but also how misguided. How it is going to have the opposite impact that those who are supporting it believe. You see, Deputy Tadier spoke of his £3 piece of fish. If we do remove G.S.T. from fish, 3 per cent or 5 per cent, Deputy Tadier will save undoubtedly 9 pence or 15 pence on that piece of fish, provided of course that the full amount is taken off by the retailer. Even the Deputy admitted that that is not by any means certain. Indeed the cost to the retailer of administering this more complex scheme will obviously increase his costs and they will need to be recovered. So, a full reduction on food is not very likely. In fact it is almost certain not to be the case. But, let us assume for the sake of illustration that the Deputy does save 9 pence currently, or 15 pence when it