Hard News by Russell Brown

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Hard News: The GST Punt

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  • andin,

    Poorer people spend more of their money on food, so this change would make more difference to the poor than the rich.

    Umm shouldnt that be expressed as percentages of income?
    Anyway time for a story told by Kiefer Sutherland's grandpapy, Keifer tries to look suitably serious in the short intro

    raglan • Since Mar 2007 • 1891 posts Report Reply

  • Matthew Poole,

    If enforcement is the problem, we have a judicial system that doesn't require money for representation. We have CAB.

    And the CAB lawyer will represent you before the TRA? Prepare your response to a demand for arrears? Explain to you how to classify your various horticultural produce? Pull the other one. Plus, there're how many CAB lawyers with how many hours available to advise how many tens-of-thousands of small-business owners? Your faith in the free resources is touching, but very, very naive.

    supermarkets would have to trade at the same level as the smaller ones or they would loose business

    You'd think so, wouldn't you? But it's not true. Plenty of evidence of small operators under-cutting the supermarkets in a huge way on fruit and vege, but do the supermarkets drop their prices? Do they hell.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole,

    Incidentally Matthew, do you work in a call centre? Because "the computer won't let us" is the standard excuse CSRs use for business failings?

    Have I said it can't be done? Have I said it's impossible? Have I said computers can't be made to do it? Have I? No, I haven't. I've said it'll be expensive, and complicated, and the costs associated with introducing such complexity will be very significant; sufficiently significant that I doubt the benefit will outweigh them by very much, in fact, if at all.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • BenWilson,

    Poorer people spend more of their money on food, so this change would make more difference to the poor than the rich.

    Do they buy a lot of fresh food though? It's always more expensive, for the obvious reason that it's better, and it doesn't stay fresh for long. I think people in the middle would be the only ones who might change any of their habits over this, and even then I'm very dubious - as Russell pointed out in the post, price of fresh fluctuates annually many, many times more than even 15%.

    As always, the people who will benefit most in absolute terms will be the wealthy, who always buy fresh, always have, and always will.

    Seriously, if this is about poor people eating, the better way is to drop income tax at the bottom, increase welfare. Then they can decide if everyone else's ideology that they should eat fresh whether they can really afford to or not should apply to them. Or spend it on any one of a thousand other things that money can buy and fucking the tax system can't.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sofie Bribiesca,

    Your faith in the free resources is touching, but very, very naive.

    Yeah fine, I don't claim ever to be an expert but I actually used all those free services and they do work for those of us that want to budget correctly.

    You'd think so, wouldn't you? But it's not true. Plenty of evidence of small operators under-cutting the supermarkets in a huge way on fruit and vege, but do the supermarkets drop their prices? Do they hell.

    Well where I live, I shop at all the fruit and veg shops around the supermarket.They know me by name and the service is brilliant, so if the supermarket doesn't want my business, so be it.There is no shortage of small shops around big business to enjoy the custom. I'd rather go to the farmers markets personally. I actually don't put the supermarkets first.

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

  • Kyle Matthews,

    Seriously, if this is about poor people eating, the better way is to drop income tax at the bottom, increase welfare. Then they can decide if everyone else's ideology that they should eat fresh whether they can really afford to or not should apply to them. Or spend it on any one of a thousand other things that money can buy and fucking the tax system can't.

    I think that there's value is trying to make things that are good for us cheaper, if that will lead to people eating more of them and having positive outcomes. A general increase in income won't lead to an increase in healthier food, as you haven't changed the priority by changing the relative prices.

    I think there's a lot of ifs along that path though.

    Since Nov 2006 • 6243 posts Report Reply

  • Kumara Republic,

    A general increase in income won't lead to an increase in healthier food, as you haven't changed the priority by changing the relative prices.

    I read once that Texan oil barons were a case in point, with all the t-bone steaks and what-not.

    The southernmost capital … • Since Nov 2006 • 5445 posts Report Reply

  • Sacha,

    As others have said, this is really about generating attention around a core political difference, not primarily about whether it's the best solution. We're talking about it, so I guess it's working already in those terms.

    The public and media discussion too often drops into being framed only in neoliberal terms, yes. PAS being a hotbed of geekery, we have naturally added a focus on how technically implementable such a system would be. I'm enjoying hearing more about food pricing signals.

    This seems part of a broader conversation about how to source state income, including the 2007 local government rates review and this government's last Budget adjusting some tax sources including the rise in the GST rate. Savings policy changes will add an impact soon. Local Government Act changes and the Supercity and Christchurch experiments show another part of the picture. Expect further local government tinkering if Hide's wheels stay on long enough, unless strategists suggest delaying until after the national election.

    If the problem is poverty, then let's address it. And not (as the last Labour government quietly did and this one more proudly) retain some destructive core policies from the 1990s including benefit rates deliberately set below subsistence levels and tanking the economy by slashing public spending when private sector debt is the issue. English did that in the late 90s and it looks like he's succeeding again - remarkably consistent performance. At least Labour in government focused on job creation and investment in working families but there are an awful lot of children, young people and striving adults not reached by that.

    There has been some good work on tax-free income thresholds, including by the Greens and I think the Child Poverty Action Colalition. Would be good to hear more discussion of that as another approach to managing redistribution like Working For Families and a myriad of other systems do. Keith Ng's post comparing NZ and Australian tax systems showed the impact their larger tax-free threshold has.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Bart Janssen,

    Ben

    might change any of their habits over this, and even then I'm very dubious

    I'll go along with you on some of your other points but I'll dispute this.

    The WHO study Russell linked as well as many other studies prove that consumer purchasing patterns are heavily influenced by price. It is the single biggest driver in purchasing choices between similar products and has been shown (in controlled statistically significant studies) to alter long term buying patterns.

    In short if you make it cheaper people will buy more of it and the reverse is true.

    It is one of the problems in the nutrition field that unhealthy heavily processed "foods" can also be very cheap and in that situation it doesn't matter how much education you do it is almost impossible to get people to change from cheap unhealthy to more expensive but healthy. Even though in surveys they say they would make that change!

    Auckland • Since Nov 2006 • 4461 posts Report Reply

  • ScottY,

    If enforcement is the problem, we have a judicial system that doesn't require money for representation. We have CAB. Google it.

    I used to do volunteer consultations for the local CAB some years ago. If someone had come in with a tax problem I would have stared blankly at them before telling them I couldn't help. Tax law is highly specialised, and most lawyers don't go near it.

    If this policy is all about tackling obesity, why then does Australia still have such an obesity problem? They've had exemptions on food for years. Most stats I've been able to locate on Google rank Australian obesity levels on a par with our own.

    West • Since Feb 2009 • 794 posts Report Reply

  • Sacha,

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

    I feel like a priest who has been wrestling with his belief in god and has now decided god does not exist.

    It's time for me to recant and to say what I've been thinking for months: the economic god of completely free markets and capital flows is not worth believing in anymore and we must look for other things to believe in and do.

    I think New Zealand needs to have a debate about capital controls, about foreign ownership of assets, about measures to control our currency and about being openly nationalistic rather than internationalistic about our economic policy.

    I think the Global Financial Crisis and the preceding decade of debt-driven instability in global capital markets and trade flows have demonstrated the failure of the economic model most New Zealand policymakers have adhered to for nearly 3 decades.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sam F,

    Ha, can only imagine what Kiwiblog will make of that

    Auckland • Since Nov 2006 • 1611 posts Report Reply

  • andrea quin,

    Here's an intersting article from the NY Times looking at the change in price of various foodstuffs since 1980 (the context is a discussion of the soda tax -- not so applicable here as we don't tend to gulp down a litre of the stuff a day).

    Auckland • Since Dec 2009 • 44 posts Report Reply

  • Russell Brown,

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

    Even Bollard in his book talks about entering a different world, with very different assumptions about the control of markets and the availability of credit, although not quite as vividly as Bernard.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Kyle Matthews,

    If this policy is all about tackling obesity, why then does Australia still have such an obesity problem? They've had exemptions on food for years. Most stats I've been able to locate on Google rank Australian obesity levels on a par with our own.

    I'm not sure if anyone ever claimed that it would solve obesity, or any such miracles.

    Since Nov 2006 • 6243 posts Report Reply

  • BenWilson,

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

    I've been noticing similar conversions amongst former ACToid acquaintances, and this predates the recent scandals. Laissez-faire has never been popular during depressions.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Kyle Matthews,

    I've been noticing similar conversions amongst former ACToid acquaintances, and this predates the recent scandals. Laissez-faire has never been popular during depressions.

    Sadly long term memory is however.

    Since Nov 2006 • 6243 posts Report Reply

  • Shona Sangster,

    May I suggest that anyone in Auckland who objects to paying GST on their fruit and veg (or banana pancakes for that matter) simply do their shopping at the Avondale or Otara markets? Or is that too simplistic?

    Since Apr 2010 • 5 posts Report Reply

  • ScottY,

    I'm not sure if anyone ever claimed that it would solve obesity, or any such miracles.

    Indeed, but Labour have made it clear the measure is designed to tackle an obesity epidemic. I was merely pondering whether the removal of GST from healthy foods in Australia had made any difference.

    West • Since Feb 2009 • 794 posts Report Reply

  • Sofie Bribiesca,

    May I suggest that anyone in Auckland who objects to paying GST on their fruit and veg

    I'm going out on a limb here and saying I don't think people object,(wade in of course those who disagree) I just think a zero rated tax on fruit and veg is a start to addressing the price hike that food will incur and for those on a lower income, I think it will help to budget for better food over rubbish and if you are "poor'' $4 saving odd is a nice meal if need be. The markets are always a good way to shop if one is local and wants to support the community. Some people don't like the markets for other reasons though. :)

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

  • Rich of Observationz,

    unhealthy heavily processed "foods "

    The fact is, the end to end cost of such food is often less than fresh, even though fresh food is paradoxically used as an input. If food is passed through a factory, debulked, processed, stablised and preserved so it can sit on shelves, that can cost less than dealing with fresh.

    Supermarkets handling fresh food have high costs to cover in space, labour and wastage. A lot of that is to provide the convenience of being able to rock up at any hour and buy your veggies in a comfortable indoor space. If you skip that and shop at a market. it's obviously cheaper. No roof, all the stock gets shifted in a morning. (we don't have pick your own in NZ do we? That's even cheaper).

    If government wants people to eat that expensive fresh food, then levelling the costs out would seem a good idea.

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

  • Sofie Bribiesca,

    I was merely pondering whether the removal of GST from healthy foods in Australia had made any difference.

    Can't speak for them, but I can promise you, it will make a difference for me. Just as Damian mentioned the free range eggs are way down in price now because demand increased. I know that is not the point but it is a point about having a good choice.

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

  • FletcherB,

    May I suggest that anyone in Auckland who objects to paying GST on their fruit and veg (or banana pancakes for that matter) simply do their shopping at the Avondale or Otara markets?

    Just because you pay cash and get no receipt is no reason to presume the stall-holders are not meeting all their legal obligations... they could well be accounting and claiming for their costs and declaring their takings for GST and other purposes... :)

    West Auckland • Since Nov 2006 • 893 posts Report Reply

  • Matthew Poole,

    If government wants people to eat that expensive fresh food, then levelling the costs out would seem a good idea.

    In which case, a better solution needs to be found than meddling with GST. Ignoring the compliance cost issue, ignoring the implementation cost issue, the seasonal price fluctuation of most fresh produce is many, many times the amount of GST collected on a particular item at its most expensive.
    Take grapes, for example, which can nearly double in per-kilo price between winter and summer. Apples, oranges, peaches, tomatoes, lettuces, cabbages, carrots... Need I go on?

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Craig Ranapia,

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

    Instead he sculled a whole case of Red Bull. FFS, Bernard, you've changed your mind. People do that. No need to carry on as if Paul Krugman is threatening to castrate you with his Nobel medal if you don't recant your heresy.

    OTOH, I do love the unintentional comic stylings of first gen neo-con Norman Podhoretz and ideologically bi-curious sleaze bag David Brock -- Ex-Friends and Blinded by the Right are great fun, if you've got a high gag threshold.)

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

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