For some years duty increases have been used not only to raise revenue but also as a public health measure, higher prices being seen as a deterrent to excessive consumption.
However, if consumers have become at all blasé about hikes in duty, proposals on the table for consideration tomorrow are likely to shatter their complacency.
If the States accept Treasury Minister Philip Ozouf’s plans, tobacco duty will go up by very nearly ten per cent and alcohol duty by more than six per cent. In addition, duty on fuel would go up by almost ten per cent.
These would, by any standards, be swingeing increases and it is unsurprising that an amendment has been tabled in an attempt to block them. The amendment’s author, Deputy Sean Power, takes the view that the States should forego the funds that would be raised by the rise in duties for the benefit of an Island economy struggling to haul itself out of the recession.
Among the general public there will undoubtedly be significant support for Deputy Power’s way of thinking. Many Islanders – and in particular ‘middle Jersey’ – have already formed the impression that they are being taxed to the hilt. They are likely to see the triple blow that could well be delivered through duties as the final straw.
But there is another way of looking at Senator Ozouf’s proposals. Quite clearly, they are no populist attempt to curry favour with the electorate. When it comes to motivation, we must give the Senator credit for having his eyes not on future votes but on the necessity of addressing budgetary deficits. The duty increases will not plug the gaps, but they will without doubt assist the general drive to balance the books.
There are, meanwhile, the health implications of the proposed increases in duty. Increased taxation is often described as a bitter pill or strong medicine. In a sense, that is exactly what the rises in the cost of tobacco and alcohol would amount to.
It is generally understood that this is an Island that collectively drinks to excess and where smoking still leads to too much sickness and death. Can the Budget be too wide of the mark if it helps to address these issues of vital importance as well as making economic sense?