The Prime Minister is refusing to discuss claims that his party will propose to cut GST from fruit and vegetables.
This claim has been made by the National finance spokesperson Nicola Willis.
She says she has material that shows the party intends to announce this policy when it unveils its tax plans.
And she says Finance Minister Grant Robertson fought hard to block this change but he was outvoted.
“Labour’s Cabinet and caucus are massively divided on tax policy," she says.
"The cracks that were exposed after infighting over the failed wealth tax policy are continuing to deepen.
“I understand Labour will soon announce a tax policy of removing GST from fresh fruit and vegetables – despite Grant Robertson raising significant concerns about the idea."
Willis adds that as late as May of this year Robertson appeared to rule out such a policy, saying it wasn’t practical and would mostly benefit supermarkets.
But she says his objections have been overruled by his own party members.
Asked about this claim in Christchurch, Chris Hipkins refused to debate the matter at all.
"National should try to make sure their own promises add up rather than purporting to announce policies on behalf of the Labour Party," he said.
"I am not announcing our tax policy today."
Removing GST from fruit and vegetables has long been supported as a way of supporting low income people as well as encouraging a healthy diet.
But a criticism of it is that it has high administration costs.
And Ranjana Gupta, a senior lecturer in taxation at Auckland University of Technology has suggested it does not significantly improve affordability and healthy eating choices for struggling families.
Hipkins is adamant the matter is academic anyway.
"I haven't announced our tax policy yet so people can speculate all they like.
"I would suggest the National Party focus on making their own numbers add up. They have announced multiple tax policies, and they don't seem to have any idea as to how they would pay for them."
101 Comments
Implementing and administering such exemptions from GST will be a minefield. Robertson is quite right. But even so, less of a problem than that of a wealth tax . Robertson couldn’t see that though. These people are at sixes and sevens to put it mildly. Why don’t they just call it quits and go run a circus.
But why bother? Why have the government applying discounts to certain things? Its already cheaper to eat healthy home cooked meals (despite popular opinion), but people don't because it is harder and tastes boring.
Apparently sex is good for you, should the local brothel be exempt too?
Agree, they're probably better off thumb sucking a figure and then adjusting the bottom tax bracket.
E.g. Assume the average kiwi household spends roughly $3k per year on healthy food. @ 15% that's $450, call it $500.
Increase the 10.5% $0 - $14k bracket to $0 - $21,142.85. That $7142.85 at 7% less tax = $500 savings.
I don't think it will make any difference at all. I mean at Countdown, Apples are $3 - $4 per kg. Frozen vegetables $4 - $5 per kg. Potatoes $4kg. Carrots $3kg. An hour for a 3kw oven, call it $1 worth of power.
Meanwhile, a packet of potato chips is $1.90 per 100gm ($19kg). Frozen pizza $12 - $16kg, a Big Bens pie $17kg. A big mac combo is what $13? the burger is 200 grams and another 150 grams for the fries? Taking GST off healthy food won't fix laziness.
Take off 15% and within a year the products will be back at the same prices.. but with supermarkets pocketing the extra 15% as profit.
Better for chippy to do his job properly and break up the duopoly and encourage cometition... as Labour have been promising since forever.
Every other country haven’t got our bureaucracy overblown, self interested, opinionated, unaccountable and dependent on having to hire consultants to remove any risk of blame for anything that they might get around to doing. For example look at the sheer volume of stuff ups the MoH concocted throughout the pandemic. On current form, where then is the acumen, application and methodology present in any government department, to implement and administer this change. Oh, hang on, why not get consultants onto the job then.
"We're the worst country ever"
"No we're not - counterexample"
"So you're saying because we're not the worst country this justifies this policy?!?"
You might have construed something logical in your mind but you jumped a few steps expressing it in these comments, to none of the other commenter's fault
What other countries have GST/VAT or sales taxes removed from fruits and vegetables? This supposedly doesn’t include meat/milk/poultry or seafood? On the back of an envelope we would save around $4-5/week IF the supermarket passed all discounts onwards. Which they won’t.
That’s the point. The supermarkets are easily selling produce with the 15% GST on top.To them that’s what’s marketable, that’s what people can, will or have to pay. Therefore it wouldn’t take long for the supermarkets to return those prices to what they know they can be sold at. If Hipkins can’t work that out he needs to put his short pants back on and go back to school.
Agreed.
Complexity of this aside (e.g. is the dried mango I just demolished a fruit and therefore subject to GST exemption?) you'll see an initial price cut followed by a surreptitious creep back upwards to where the consumer had demonstrated a willingness to pay.
You know there isn't enough competition when all the prices are rounded. For example all the types of apple at our supermarket are usually $4.99 k/g unless on special then that type might be $3.99. In a proper competitive environment they would all be different prices - the amount they could screw the supplier down to plus a small margin. So yeah I agree removing the GST is unlikely to do much in the long term (they will probably take the 15% off on day one but it wouldn't last).
Agree too - its a silly policy much like reducing the excise tax on petrol. Easy to take off, difficult to put back. But at the same time, things need funding - Tax is important because if funds things we need. How we tax is what they should be looking at, not this pointless tinkering. This is basically tax virtue signalling.
If they want to reduce the price of fruit and veg - help agriculture with climate change adoption and run education campaigns on seasonal eating & nutrition. Also breakup the supermarket duopoly and any supplier monopolies. Of course this will require doing something significant, which labour seems afraid of.
Silly tax cuts like this offer a short term sugar hit at the expense of long term addressing of the issues causing the price rises in the first place.
Honestly Eric, don't give her airtime by writing a story about rumours and conjecture. Wait until the announcement and then report on the division/contrast to nationals plan. The kind of behaviour that nicola displays belongs in american politics not in NZ
This is clickbait journalism and I expect better from Interest.co.nz
Well if Hipkins should announce such policy it will be by then a damp squib and in so doing he confirms that there is a serious leak within his caucus. In fact that might well be from within cabinet where there are a couple of disgruntled senior ministers sulking over the dismissal of the wealth tax and at the same time, not without good reason on record as being opposed to the tampering with GST. And then, on the other hand, if Hipkins does not announce the GST thingy, then it looks like he has had to bow to pressure and back down, making him look even more weaker.
Looks like Luxon is heading to be our accidental PM at this rate. I say accidental because i'd be surprised if in the past if anyone has been elected PM whilst polling & performing so poorly.
But hey - Labour is arguably doing a much better job of getting people to vote National and ACT than National and ACT are themselves. And either way - the lack of anything beyond rhetoric from the main parties to address the big challenges NZ has, means that whoever is elected all that will come of the change will be more can kicking and tinkering around the edges to keep the boomers happy.
Meanwhile, for anyone with 20-40 years of the working life still to go - why would you stay around just to be used as a bank to fund the retirement village (of what is becoming NZ)?
This is pretty much how I feel. There are no good options and despite the twitterati on left or right getting stuck on over why their team is going to be amazing.
It wont be.
NZ has so many challenges no one is addressing - cost of housing, a health system on its knees, our inability to build infrastusture, inability to deal with climate change, growing inequality, low growth & productivity, low wages etc
If Labour can't do anything decent with a rare majority, then what hope to we have with a National / Act or Labour / Greens govt next term. More of the same.
They're just claims at this stage. Like the time that John Key claimed National wouldn't increase GST.
Not whataboutism at all. I voted National in 08 and voted ACT ever since, Labour is the last party I'd ever vote for or stick up for. Just pointing out the extreme irony is all, which is factual.
Your comment is a classic lazy deflection coming from I assume a National Party loyalist.
Well Hipkins is in a bit of a spot. If he confirms this change it’ll be a bit of a damp squib by then and he will also be confirming that there is serious dissension, and leaking aplenty in his caucus. If he doesn’t proceed, then it will look as if he has chickened out, or been overruled, and his Police Minister is prone to fantasies
and who was his senior adviser when that happened?
She was a member of the Victoria University Debating Society, and competed in international tournaments. After graduation, she took up a position as a research and policy advisor for Bill English and went on to serve as a senior advisor to John Key in 2008.
Oh, that would be the journalism graduate? The finance spokesperson whose financial experience goes so far as working as a cashier at Wholly Bagel Café? At least it wasn't a Fish and Chip shop though, am I right LOL?
How do both our major political parties attract such bottom of the barrel candidates?
Economist Sylvana Tenreyro of the Bank of England stated this in a speech that she gave here. https://www.bankofengland.co.uk/-/media/boe/files/speech/2023/april/qua…
Economist Paul Sheard of Standard and Poor's also stated the same here. https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/programs/…
If true then it will not make very much difference to households' spending, especially when you see how much the price of fruit and vegetables varies from week to week and season to season. For example, the price of broccoli can be up to $4 one week and $1.50 in a few weeks time so 15% isn't going to make a lot of long term difference. At least it sounds like a good election spin though.
that happens with all subsides, that is why they dont work, after a period the seller will absorb the rebate and gain extra profit, that is one reason why raising the accomodation supplement is not good for renters but of more benefit to landlords, it is a short relief
Removing tax on fruits and vegetables is stupid. There is no evidence that fruit and vegetables are good for you. Quite the opposite in fact.
Fruit, at least, should be highly taxed like cigarettes to pay for all the diabetes and dementia treatment that results from its consumption
Meat on the other hand should have no tax and even be subsidized as well as provided for free at school.
My work this week has been performed with supreme calmness while achieving genius level results all because of a zero carbohydrate diet.
Did some weight lifting, sprints and a 15km walk up and down hills. I am in my sixties. The trick is to become "fat adapted" where you burn fat instead of glycogen. Unfortunately it does take a year or so to achieve this state. Also, brains function much better on ketones. I'm 177cm tall and weigh 71kg.
I'm curious to know if any other readers have gone down this path.
I did once suggest building a huge pallet "Wicker Man" on Mount Eden and burning it as a primal spectacle to raise the spirits of Aucklanders.
Human sacrifice was mostly driven by farming cultures to ensure good harvests.
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However, in a nutshell, I'm really arguing against government subsidizing food based on unsubstantiated scientific claims.
I used to grind out 40 minute hill sessions on a spin bike at max resistance. I ate more than I ate when I was at my heaviest and kept losing weight. Black coffee, bananas, chocolate bars. I didn't really ever feel like I was missing out on anything either.
Now the problem for me is space and time. I bought a bike years ago but haven't been able to set up a proper space to use it and my eating habits are probably throwing an extra 1500 calories a week into the mix I could just not be having.
Those two simple changes - setting up the space for my actual exercise and cutting out the two or three snack foods I eat daily that are a problem - would probably tip the balance back into my favour. My weight is now about 20kg up on where it was. I would love to get it back down. So that's this weekend's job.
Plenty of people don't just live well on a carnivore diet (animal meat, seafood, eggs, while all avoiding all other foods) they positively thrive on it. The hard part about a carnivore diet is the cost of the food and not fitting in with those who wrongfully believe it's an unhealthy diet.
Agree with you on this. I went from 139 to 96 in less than six months by becoming fat adaptive. Fasting for 16+ hours a day was the key to that in my view. Never dropped the carbs completely but certainly didn't eat as many as I used to. Diet beats exercise for weight loss but exercise has benefits regardless. Lost over 50kg in my 20's too but never joined the dots that I was fasting without realising so obviously fat adaptive for a period back then too. I don't care about the weight loss; it's not feeling hungry all day that I like and having constant energy levels.
Not feeling hungry is a huge benefit and the key to success. I have people around me that almost lose their minds if they haven't eaten for three or four hours. I haven't fasted for a while; last time I did I effortlessly made it 48 hours. It makes sense to me that the body does a cleanup (autophagy) during this time as well as consuming fat stores.
Don’t think so, this is question of tax and she is the relative spokesperson. You have a point though. Luxon is not a natural politician, and he may never be. Labour is now a case of a house divided that cannot stand. Luxon just needs to stand clear, boring perhaps but steady and reliable, let others better equipped be his pinch hitters.
Watching him in Parliament, I don't think attacking is his style. Maybe that's why he comes across as a bit boring on attack ,tending to use the same cliches over and over. because its not really what he is used to doing, certainly not in a CEO's training . He's actually pointed out when Labour does something right , or that he agrees with a few times.
Willis doesn't hesitate to attack, and can be quite nasty about it.
To the actual idea , yes nothing to ensure the supermarkets pass it on.
I'm thinking maybe a rebate scheme , on all healthy food , would be better. Tie it in with education , 5 a day and all that. maybe based on the heart health tick type system.
The retailer is just handing out the "Tokens", how they are redeemd , i would make it only on more healthy food.
People love points and rewards schemes,and it could be tied into a community services or health card,or just your supermarket rewards card .not like food stamps type shame , because everyone is using their card , and nobody else sees what benefits per food item are loaded into it .
Also could negate the *potential* for the supermarkets to pocket any GST savings for those that opt in. The Government could have a system that links with the supermarket's point of sale/ERP system with a database of approved products by SKU. Then the only real "massive" overhead is maintaining these approved products, and how the rewards are dispersed.
Because the system would work off I assume a Government issued card, the risk for fraud would be limited to potentially individual store owners/employees using their own cards to rack up rewards on dummy sales. Also, do we trust the Government to securely integrate software into private businesses' IT systems?
if Hipkins really pushes for a GST tax cut, then it'll be a very bad political move. It will piss off the hardcore Labour voters, and proves National's tax cut policy legitimacy.
On top of everything, the info leak from Labour provoke the question if Labour has lost control of its own cabinet
i would think the leak is from a parliamentary staffer/advisor, they are supposed to be non political but many are not and around election time will quietly help the side they want to take power and be their new bosses and it becomes very hard to nail down where the leak is coming from
Just have to wonder how deeply entrenched partisan values are in our public sector. For example, let's say Immigration NZ leadership team are made up of predominately National Party supporters. Labour come into power campaigning to reduce net migration, everybody knows it. A memo is sent out to INZ.
"Yeah nah, LOL, what are you going to do Labour? Sack us?" *ramps up the speed at which visas are processed* etc to sabotage Labour's promise. Conspiracy theory stuff, but not impossible.
As always, policy to treat symptoms not causes. You can eat for reasonable (but no longer cheap) costs - but you need to do it yourself and know enough to know how to do it.
Militating against that are elements like a dominant supermarket duopoly that turns us all in to price takers, a time-poor population, a reluctance to teach basic home economics skills (like cooking) at home or school, the unrestrained advertising of convenience foods that are designed to be addictive with fat, salt and sugar...
It's kind of amazing we don't have an epidemic of obesity and...oh...wait...
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