Removal of GST from food and essential grocery items
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WQ.142/2026
WRITTEN QUESTION TO THE MINISTER FOR TREASURY AND RESOURCES
BY DEPUTY L.D. CARPENTER
QUESTION SUBMITTED ON MONDAY 6th JULY 2026
ANSWER TO BE TABLED ON MONDAY 13th JULY 2026
Question
"Will the Minister provide an estimate of the annual cost to public finances of removing GST from food and essential grocery items and will he advise what assessment, if any, has been undertaken of how such a change would affect lower, middle and higher-income households?"
Answer
The estimated annual cost of removing GST from food is £14 million, which is based on Statistics Jersey's Household Spending 2021/2022 report, uprated by inflation.[1] The term essential grocery items' included in the question is undefined and therefore items cannot be identified for inclusion in the modelling.
The most appropriate assessment of the impact on different households is arrived at by examining the estimated saving for each 20% of households (quintiles). The question asks specifically about lower, middle and higher income households, which are highlighted in bold in the table below. The analysis shows that removing GST from food provides the most benefit to the highest income households because they spend most on food:
Household income quintile | Saving from removing GST from food | Percentage of saving received |
Lowest quintile | £1.8 million | 12% |
Second quintile | £2.3 million | 16% |
Middle quintile | £2.9 million | 20% |
Fourth quintile | £3.4 million | 24% |
Highest quintile | £4.0 million | 28% |
Total | £14.4 million | 100% |
Analysis from other countries suggests retailers often do not reduce their prices accordingly, especially when the GST reduction increases administration costs for businesses.
When GST was introduced, the States also agreed enduring compensation for Islanders for the impact on food prices via three mechanisms:
- Improved personal tax allowances – 6.5% increase from 2007 to 2008;
- Uplifted Income Support payments; and
- Targeted support (e.g. through the Food Cost Bonus, and later the Community Costs Bonus)
Ministers maintain that a broad-based GST, accompanied with these support measures, is the most effective way to support people with the cost of GST on food.
[1] Household food spending estimates have been calculated using the increase in the RPI food index over the period Q1 2022 to Q1 2026.