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Jersey proposal to cut GST on foodstuffs

Inflation rise above 10% prompts consideration of temporary zero-rating of basic foods

The Jersey Assembly is to review a Bill to temporarily reduce the 5% Goods and Services Tax on basic foodstuffs to zero. This would exclude alcoholic beverages.

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The cut would be for food (excluding alcoholic drinks), to be based upon the zero-rating categorisation of food utilised by United Kingdom Value Added Tax arrangements, as set out in the Appendix A or such other categorisation identified by the Minister for Treasury and Resources that respects the principle of exempting or zero-rating these items.

Some food suppliers have already increased their prices three times this year, when a once-a-year price increase would be the norm.

The States agreed in July 2005 to introduce a 3% broad-based GST effective from May 2008. The standard rate of GST was increased from 3% to 5%, effective June 2011. The full year effect on GST receipts at the new rate of 5% was first seen in 2012.

European inflation VAT cuts have become popular across the region as inflation hits forty-year highs.


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