GST – Exemption for the Tourism Industry

The Jersey Evening Post today carries a special 4 page supplement, commissioned by The States of Jersey, putting forward the argument for GST and explaining why it is needed.

Whilst Jersey residents brace themselves for the new tax which is to be introduced in May 2008, visitors to the island next year will be delighted to find that they will not be charged GST on their accommodation at all.

How come? Back in July, a Jersey tour operator put forward a strong case for their prices to be exempt, as they had to finalise the brochure prices before the final details of GST were agreed and would not be able to adjust these once brochures had been printed. The argument for exemption was forcibly put and resulted in the GST office agreeing to make tour operators only exempt on any bookings for 2008. This news emerged via a letter to the tour operator from the man responsible for co-ordinating the introduction of GST, Steve Lowthorpe, at the end of July.

Immediately it became clear that this decision would cause huge administrative difficulties for accommodation operators and, more importantly, was anti-competitive. The situation as it stood, meant that clients booking with a tour operator would not being charged GST, whilst those booking direct with the hotelier would have to stump up the 3%.

Once these issues had been pointed out to Steve Lowthorpe, several further meetings took place with the Jersey Hospitality Association and today we have been advised of the following by Steve Lowthorpe:

‘To provide the JHA and its members with some level of assurance I can confirm that the Minister of Treasury and Resources has agreed "in principle" to allow all bed / accommodation sales to be zero rated under the transitional arrangements of the GST law. This will be allowed for 2008 only and all such supplies will be subject to the standard rate of GST as from 1st January 2009. This decision will still need to be formalised but hopefully the content of this e-mail will provide certainty and the desired equity of treatment between hotels and tour operators.’

So, now it appears that the whole of the Jersey accommodation sector, as well as tour operators will be GST exempt. A great result for the industry who have battled hard for concessions in the past to no avail and well done to Gerald Fletcher at the JHA for his efforts. I am surprised that the Terry Le Sueur has backed down on this & wonder how other industries will react to the news. Surely there are other sectors which are in similar situations with regard to pricing for 2008?

I may even have a small wager that we could see the GST implementation date put back until January 1st 2009. The States are due to debate the law in October – so we don’t have long to wait.