Sunday, November 23, 2008

GST Exemptions: Easy, Principled Adjustment - or Expensive, Bureaucratic Nightmare?

Clameur de Haro? has been looking in a little more detail today at Deputies’ Election candidates’ positions (well, their stated positions, anyway) on the thorny subject of GST exemptions.
Inexplicably, a sizeable number don’t actually mention the subject at all, which in view of its prominence, strikes CdeH? as extremely odd, to say the least.
Of those that do, and with the honourable exceptions of Ian Gorst in St Clement, Rod Bryans in St Helier, and John Le Fondre in St Lawrence, candidates universally declare their objection to its general application, and call for exemptions on, variously, food, heating supplies, and children’s clothing, or more usually a combination of all three.
But not a single one of them offers either the slightest estimate of the revenue shortfall which would result, or any proposal for meeting that shortfall, whether by reduced States’ spending or compensatory increases in tax elsewhere. This omission is fiscal irresponsibility of a high order.
Over at Tony’s Musings, Tony has (as usual) a thoughtful critique of Sean Power’s position (basically - it’s here, so let’s leave it settle for a while), and suggests that to exempt foodstuffs, heating and lighting, and children’s clothes really can’t be difficult or bureaucracy-creating to any significant degree.
Clameur de Haro? disagrees with Tony on this, though –
On foodstuffs, should we exempt, say, caviar, yet apply GST on toothpaste? That hardly seems to be in the spirit of what’s proposed.
On heating and lighting, say, should we really make no distinction between heating for the pensioner’s apartment, and heating for the multi-millionaire’s swimming pool? Or between lighting for the pensioner’s apartment kitchen and lighting for the multi-millionaire’s driveway? Both cases involve use of the same materials from the same supply sources. But that doesn’t seem equitable.
On children’s clothing, should we exempt, say, the expensive designer tops the relatively affluent might buy for diminutive but highly fashion-conscious 13-year old daughters, yet levy GST on the suit the man of modest means struggles to buy for his tall, well-built 16-year old son, newly left school and going for his first job interview? That hardly seems fair.
CdeH? is afraid that these kinds of dilemmas over definition and rating would occur all the time, and that additional, costly, bureaucracy and administration will be the inevitable result – producing a double-whammy, in fact, because the extra costs of it would have to be layered on to a smaller tax base. Which neatly completes the circle, because none of the exemption-favouring candidates either knows, or will tell us if they do know, how they would address the consequences.
For this reason, Clameur de Haro? will be sticking with one of the realists who, rightly, eschew facile, ill thought out promises, and have the courage to tell it like it is. But at the same time imploring them to grasp, in return, the nettle of arresting the inexorable growth of public spending by an administration to whom stringent fiscal discipline seems a wholly alien concept.
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Captain Fantastic said...

Never really understood the arguement for GST on books, we spend a fortune on education yet tax reading material.

Another thing is the trouble that struggling businesses have had in implementing and managing the collection of GST.

I asked Deputy Le Fondre when he first stood on the question of exemptions and he said then that he was not in favour of them, so the electorate knew then what they were voting for.


jeremy strickland said...

Allow me to get the ball rolling on a simple definition of food:

'Food and food ingredients are defined as substances, in any form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.'