22 October 2010 Last updated at 12:35

Jersey's Goods and Services Tax set to rise to 5%

Senator Philip Ozouf said the budget is a "pivotal" one for the island

Plans to raise Jersey's Goods and Services Tax (GST) from 3% to 5% have been unveiled as part of the 2011 budget announcement.

The island's treasury minister, Senator Philip Ozouf, is proposing the increase from 1 June 2011.

Islanders are charged GST on most items such as newspapers, food and petrol.

The budget also outlines plans to put up the price of a litre of spirits by 58p, a packet of 20 cigarettes by 35p, and a litre of unleaded petrol by 2p.

Jersey's Council of Ministers hopes the States can make £65m of savings by 2013 through its Comprehensive Spending Review.

Senator Ozouf said: "This is a significant saving and we are intent on delivering it without serious detriment to the level and performance of front line services.

Duty Proposals

• Spirits - 58p rise on a litre
• Wine - 7p rise on a bottle
• Beer - 2p rise on a pint
• Cigarettes - 35p rise on a packet of 20
• Petrol - 2p on a litre of unleaded

"The highest priority for savings is through efficiency in existing practices and reorganisation of functions where this will reduce costs and improve performance."

GST has remained at 3% since it was introduced in Jersey in May 2008.

Announcing the planned increase, Senator Ozouf said: "Although GST is controversial there is little doubt it raises money in an efficient way that does minimal damage to the economy.

"The Council of Ministers and I recognise people are concerned about the impact a rise in GST will have on the less well-off in our island.

"That is why I also propose, in the interest of fairness, to compensate those on income support and maintain an adequate GST bonus for those on low incomes but not receiving income support."