Hard News by Russell Brown

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Hard News: The GST Punt

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  • Sofie Bribiesca,

    FFS, Bernard, you've changed your mind. People do that. No need to carry on ...

    Oh come on now Craig, an epiphany of such importance should be allowed to swing from the chandeliers or wallow in the pits of despair. Give the lad a break dude. ;-)

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • Kumara Republic,

    What timing. Bernard Hickey is tiring of the kool aid.

    By the looks of it, at the very least he's going Gareth Morgan (from apostle to agnostic). At most he could even be going Joseph Stiglitz (apostle to outright apostate).

    The southernmost capital … • Since Nov 2006 • 5443 posts Report Reply

  • Amy Gale,

    How about this?

    1) Design a "standard" annual fruit+veg shopping cart in line with 5+ A Day recommendations and so forth.

    2) Compute price of cart, and thus GST.

    3) Send everyone in the country a check for the GST amount.

    4) Er...

    5) That's it.

    tha Ith • Since May 2007 • 471 posts Report Reply

  • Matthew Poole,

    Amy, and that'll be done six times a year? Our fruit and vege prices fluctuate dramatically, so it's not a once-a-year exercise to carry out that kind of calculation. Plus, what if you're a large family? Or a small one? Or single and living alone? What's the pro-rata on the cheque?

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Bart Janssen,

    Amy

    If most folks are like me they'll see that check and think ooo I can buy that nice bottle of Pinot Noir or new shoes.

    The most effective way of changing purchasing patterns is to change prices. Make healthy food cheaper or unhealthy food more expensive. Other things work but not as well.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • BenWilson,

    The most obvious way I can see to definitely get fresh fruit and veg eaten more is to issue vouchers for them. But when you put it like that, as food stamps, suddenly it doesn't sound like such a good thing. It is, however, the effect this proposed exemption is dreaming of.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Amy Gale,

    Amy, and that'll be done six times a year? Our fruit and vege prices fluctuate dramatically, so it's not a once-a-year exercise to carry out that kind of calculation.

    Prices and availability obviously fluctuate. This is why I referred to an "annual" cart in the first place: you can't buy strawberries in April - or if you can, you shouldn't expect them to be very nice - and lettuces in September are going to cost more than in November. Nonetheless, humans have for thousands of years had the ability to record numbers and then sum them. I'm pretty confident that there are still people capable of this.

    So there's no reason it can't be once a year. In the run-up to tax time would be nice, then it could be packaged into people's rebates or used to offset tax owed.

    Plus, what if you're a large family? Or a small one? Or single and living alone? What's the pro-rata on the cheque?

    "Everyone in the country" means that if you exist, you get a check. There's no reason to complicate it with pro-rating. Except, perhaps, for people who are born or die during the year.

    tha Ith • Since May 2007 • 471 posts Report Reply

  • Amy Gale,

    If most folks are like me they'll see that check and think ooo I can buy that nice bottle of Pinot Noir or new shoes.

    But that's fair enough, isn't it?

    If you genuinely eat zero fruit and veg, then the rebate didn't do anything to make you eat them (would a GST reduction have been different?). Anyone who feels they need shoes more badly than they need fruit could well be right, and yay that they will have the opportunity. Anyone who feels they need a nice bottle of Pinot Noir more than they need fruit is probably comfortable enough that they aren't going to be dissuaded from healthful food on financial grounds anyway.

    If you do eat fruit and veg, but see the rebate lump sum as an opportunity for other spending, that's just bookkeeping.

    tha Ith • Since May 2007 • 471 posts Report Reply

  • Kyle Matthews,

    Except it would just be a general tax refund, which wouldn't lead to people purchasing more healthy food.

    Since Nov 2006 • 6243 posts Report Reply

  • Kyle Matthews,

    What Labour is trying to do is price signal. If you can reduce the price of healthy food relative to unhealthy food, people should eat more of it.

    If you give them a general tax rebate, they'll use it on whatever, in which case people will be asking why the rebate is the value of a year's worth of fruit and veges.

    Since Nov 2006 • 6243 posts Report Reply

  • Kumara Republic,

    But when you put it like that, as food stamps, suddenly it doesn't sound like such a good thing. It is, however, the effect this proposed exemption is dreaming of.

    Zero GST on produce seems to be the carrot to the food stamp stick.

    The southernmost capital … • Since Nov 2006 • 5443 posts Report Reply

  • Amy Gale,

    People in general want to buy nutritious food for themselves and their families. Access and affordability are the most significant impediments.

    - Removing tax on "healthful food" - even assuming there was a way to define it that wouldn't be a perpetual nightmare - might improve affordability. However, there is an upper bound on the amount of improvement we can get, and there is the distinct possibility that prices won't budge by that much.

    - Transparently computing a lump sum and giving it to people means that the cash is actually in their hands and not being eaten by compliance costs. It also means there is no need to make a healthful/not determination for every single product in the country. There is still an upper bound on the improvement in buying power, and now there is no push toward using the money for healthful food (except people's own inclinations).

    - Additionally taxing UN-healthful food would allow for unbounded manipulation - the price difference could be as big as we wanted. However, we're back to having to decide what is and is not healthful.

    None of these do anything to improve access, which recent studies (linky) seem to indicate is the bigger problem anyway.

    I certainly don't think a lump sum rebate is a perfect solution; I don't even necessarily think it's the best solution. I do, however, think it's better than adding exceptional cases to the tax structure. These don't seem to end up benefitting anyone but the food industry behemoths with the pickiest lawyers. (Don't worry if NZ doesn't have its own behemoths - the US will be sure to share if the tax advantages are right.)

    tha Ith • Since May 2007 • 471 posts Report Reply

  • Rich of Observationz,

    If everyone got food stamps they wouldn't have a stigma.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Sacha,

    However, we're back to having to decide what is and is not healthful.

    I have yet to hear anyone put a good case for sugar, or transfats, for instance.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Matthew Poole,

    What Labour is trying to do is price signal. If you can reduce the price of healthy food relative to unhealthy food, people should eat more of it.

    Except that this decrease is really fiddling at the margins. It's like the whole milk vs soft drink issue. Remove GST on milk and it's still twice (or more) the price of the equivalent volume of soft drink (never mind the fucked-up situation of living in the home of the biggest dairy export company in the world!).
    If they're serious about sending a price signal, it needs to be dramatic. A 3/23 reduction in the price of fresh produce ain't enough, no matter what people might say, especially for the low-income families who're most desperately in need of assistance to buy good-quality food. All the more so when that piddling drop will be consumed (Please, only rotten tomatoes) to at least some extent by increased costs associated with its implementation and administration.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole,

    Additionally taxing UN-healthful food would allow for unbounded manipulation - the price difference could be as big as we wanted. However, we're back to having to decide what is and is not healthful.

    And also not addressing the price of healthy food to any great extent. It's all well and good to say "We'll make food that's bad for you 10 times more expensive", but how does that help the families that struggle to eat at all even on cheap, crap food? Assuming all other things are equal, all we've done is ensure that they can afford even less food, healthier though it may be, and that's a whole different kind of not-so-good outcome.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Amy Gale,

    I have yet to hear anyone put a good case for sugar, or transfats, for instance.

    Which sounds nice and easy when you're assessing the baking aisle, but what about some of the others?

    Canned green beans have excellent nutrient retention and are available year-round, clearly healthful. Except, there could be salt and/or sugar in the brine. Does this make them instantly unhealthful? If not, is there a cutoff? If there is a cutoff, where is it? Where does each brand of green beans fall with respect to the cutoff? What if we want to adjust the cutoff later? Is every manufacturer going to just push their salt/sugar levels right up against the cutoff for optimal taste/tax tradeoff? (Clue: yes). Is it going to cost money to deal with protests about the cutoff level? (Clue: yes)

    Multiply by every food product in the country, and every food product that will come online in the future. I'll pass.

    tha Ith • Since May 2007 • 471 posts Report Reply

  • Bart Janssen,

    Amy you are raising good points.

    If you genuinely eat zero fruit and veg, then the rebate didn't do anything to make you eat them (would a GST reduction have been different?).

    Yes a GST reduction would be different. Lets agree that messing with GST probably isn't the best way to make the change. But every study done strongly suggests that changing prices actually changes buying patterns. If you believe eating more fruit is good for the population then making fruit cheaper will cause more people to buy it. And a lump sum rebate that people can choose to spend however they want will not do that.

    None of these do anything to improve access, which recent studies (linky) seem to indicate is the bigger problem anyway.

    Access to healthy food is not a problem in New Zealand. The US is different where you really can be 100 miles from a supermarket and yet have 5 fast food outlets within 10 miles. Or simply have no way of getting to a supermarket that is only 10 miles away, yet have a KFC on your corner.

    I agree defining healthy foods is not easy. But defining unhealthy is remarkably easy, at least in the most extreme cases. And if all you worried about was the extreme cases then you could keep it fairly simple.

    Sugar concentration would be my first. Anything over a set concentration of sugar (sucrose, fructose, glucose, maltose etc) gets a duty. Yes it would raise the price of honey and a couple of other "real foods" but it would also nail instantly a huge range of really unhealthy foods that are mostly sugar. Oh and since every processed food is required to list sugar content on the ingredients list anyway there is not extra cost in measuring. Actually I think honey would slip past anyway since it is an unprocessed food and hence doesn't have to list ingredients.

    So what if all that does is reduce the levels to just below the threshold. That's a good thing. It may not be a perfect thing but it is still a good thing.

    Trans-fats is another easy win.

    And so what if it is hard to do. The health of our population is kind of important and if it turns out that helping people make better food choices is hard, that's fine, sometimes doing things that are hard is worthwhile.

    Which all sounds holier-than-thou but isn't meant to be. The point is we actually could make changes that would make a difference. Exactly how to execute those changes in the most effective way is something worth discussing.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Matthew Poole,

    Backing up what Ben said, regulating ingredients and nutritional content is something that's done all the time. We've got entire bureaucracies built around establishing that what the label says is accurate. Going from there to levying duties based on the concentration of ingredients being greater than x isn't a huge step. It would be a bit fiddly to establish the levels, and decide who would police them, but as has been pointed out retail systems already allow for accounting of excise so the capability doesn't have to be retro-fitted. There'd be some compliance cost issues, and probably a few prosecutions for failure to disclose accurate levels, but these issues are already handled in the ordinary course of business.

    That said, I'm still concerned that none of these things address the underlying expense of eating fresh produce.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Sacha,

    $250m could help set up an awful lot of community vege gardens and fruit orchards - something that is happening anyway and restricted mainly by funding for the skilled coordination and negotiation involved as well as some materials.

    Partnering between local schools, Councils, community groups and businesses seems to work, and it wouldnt take much to get the whole country growing more. Not good news for the commercial growers or retailers, however..

    Ak • Since May 2008 • 19745 posts Report Reply

  • andin,

    We've got entire bureaucracies built around establishing that what the label says is accurate.

    Fresh fruit and veg, so underrepresented in the bureaucracy stakes.

    underlying expense of eating fresh produce.

    Remind me again how this happened?

    Cause I remember being able to buy boxes of fresh apples/plums/peaches in season for $10. Boxes!

    raglan • Since Mar 2007 • 1891 posts Report Reply

  • Bart Janssen,

    Remind me again how this happened?

    long answer is long.

    But short answer is because costs to growers are much higher and supermarkets have found there is a reasonably high tolerance for inflated prices.

    One practice that is particularly unpleasant is supermarkets buy all the fruit and then store it. Only releasing a new batch when the oldest batch has sold. This means you never get fresh fruit and you have to pay for storage costs. The only plus is that you can buy fruit out of season.

    Even your local Fruit world is significantly cheaper than any supermarket. And if you ask they will probably get you boxes of fruit at stupidly low prices, especially if you develop a relationship eg Sophie

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Sofie Bribiesca,

    $5 a box of tomatoes down the road and brilliant for the other 1/2 to make the pasta sauce. kiwi fruit were that also but a little ripe for me.Not alot though. :)
    Also, pick your own strawberries in season out Ranui way (end of the north/western motorway, left then right at the roundabout, straight down, can't miss it).

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • andin,

    TA Bart & Sofie.

    raglan • Since Mar 2007 • 1891 posts Report Reply

  • Sofie Bribiesca,

    andin,
    Dominion Rd has excellent food shops. These are often authentic Indian, Iranian,Thai,Middle Eastern,Asian, spices, fruit and veg, kebabs,bulk foods, cheap restaurants or tres expensive (as I note Merediths is.) The bulk foods make shopping almost delightful, as their prices do put similar from supermarkets to shame and bulk does not mean you have to buy bulk, just that they do. Try them out, you will be surprised. :)

    here and there. • Since Nov 2007 • 6796 posts Report Reply

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