Hard News: The GST Punt
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But I overheard a conversation yesterday that might warm Phil Goff's heart. In an Auckland CBD convenience store, the guy in front of me was babbling to the owner about how someone was trying to take GST off fruit and vegetables to help people – but they didn't have the votes and those other guys would block it. He wasn't impressed. Labour will be hoping he wasn't alone.
But if we want to get into anecdotal grocery shopping, I also see plenty of furrowed brows in the aisle at the Sunnynook Countdown where the milk chillers are on one side and the bread racks on the other.
Last time I looked, milk, dairy and whole grain breads (which tend to be on the expensive side) were also part of a healthy, balanced diet. So is lean red meat and skinless chicken.
Food for thought...
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Forget about removing GST from Fruit and Vege this simply won't be enough to convince the people who don't already eat these products to buy them. The Government would be better off introducing a tax on the junk food that is killing said people as well as costing taxpayers and absolute fortune in health care. This method seems to be working for cigarettes surely it would apply to KFC, Maccers and F & C's ?
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The Government would be better off introducing a tax on the junk food that is killing said people as well as costing taxpayers and absolute fortune in health care.
Ah. But that would be the politically toxic "nanny state" at work ...
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Too right about the DomPost, the coverage has been woeful, all of which will lead to another 'victory' for Prendergast via voter apathy.... Good work Wellingtonista though
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David Farrar notes this from Michael Cullen, Hansard 2004:
Hon Dr MICHAEL CULLEN: I am aware of many countries that have appallingly inefficient GST systems where they exempt various articles, where they have differential rates, and where one has to differentiate between food taken away from a place and food consumed within a place. Thank goodness we have not followed those very bad policies.
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Look, these things might have been hard to do in 1960 when the ledgers were done longhand with quill pens. We've got computers today and can process any rules the government want to implement.
Sure, most NZ firms have underdeveloped, inflexible systems, but that's their own stupid fault. The great positive for me on changing GST is that it'll bolster contract rates for a year or two.
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The universality of GST is meant to be its key feature, the thing that broadens the tax base. The world won't end if the principle is diluted, but it shouldn't be idly dismissed either.
Except that there are already exceptions (quite a few of them, and many in quite a significant area: real estate).
As "gobsmacked" put it quite eloquently in the Standard discussion thread:
It’s a headline-grabber, easy to understand, fills a political news vacuum in the recess, goes down well in Mana by-election, etc. So yes, it’s A Good Thing.
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Last time I looked, milk, dairy and whole grain breads (which tend to be on the expensive side) were also part of a healthy, balanced diet.
I understand that an earlier version of the policy was limited to exempting GST off bread, milk and eggs but was vetoed by Labour's gluten and lactose intolerant vegan council.
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Good work Wellingtonista though
Cheers, we're doing our best within the confines of our day jobs and social lives, neither of which real journalists are supposed to have...
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Ah. But that would be the politically toxic "nanny state" at work ...
No, Russell, that would be Fonterra, Federated Farmers and the wine industry having a collective brain bleed at the thought of our major export markets following suit. Though I'm sure there are battalions of industry lobbyists from Canberra to D.C. who would love the exercise since the green-washed protectionism of so-called "food miles" got busted...
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Compulsory link to the Dim-Post's take on all this:
At this stage in the election cycle an opposition party needs (a) a vision and (b) a major wedge policy wedded to the vision. For National under John Key it was economic reform wedded to tax cuts, for Don Brash it was white supremacy wedded to abolition of the Maori seats and scrapping the Closing the Gaps policies.
Labour’s vision is ‘for the many not the few’. Okay. I don’t think anyone who isn’t a politics junky knows that and its more of a slogan than a vision, but that’s what they’ve gone with. What’s their big policy star they’ve hitched their wagon to? Slightly cheaper beetroots.
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To me the GST on fresh produce is pretty arbitrary. In theory it's to help people buy healthy foods, but it only includes some healthy foods. If the list of things exempt from GST was to be expanded to be some sort of healthy/unhealthy dividing line, it would suddenly become complex. And it's a pretty small price cut. Decent amounts of fresh healthy food is still expensive, GST or not.
I agree with Russell that it's an opposition policy that doesn't really make much sense once you're in government.
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Cheers, we're doing our best within the confines of our day jobs and social lives, neither of which real journalists are supposed to have...
I saw this on the tweet machine a while back and just remembered it now.
I had to stop myself from throwing my keyboard across the room
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David Farrar notes this from Michael Cullen, Hansard 2004:
Well of course he would. but I'm looking forward and as a person who mainly eats fruit and veg, I will enjoy it not acquiring gst. If my avocados are $2.50 in off season, I will still be able to enjoy instead of thinking I should wait until summer. My saved 45 cents wil still get spent, maybe on a boutique relish. Mentally I will be in a better head space about enjoying that avoado and relish.
Look, these things might have been hard to do in 1960 when the ledgers were done longhand with quill pens. We've got computers today and can process any rules the government want to implement.
Exactly, this is not difficult to implement and it is scare mongering to suggest otherwise, which is probably where Cullen was all those long years ago.;-)
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these things might have been hard to do in 1960 when the ledgers were done longhand with quill pens.
When GST first appeared this was a real issue and the low cost of implementing New Zealand's simple system was a huge advantage.
But given most retailers run software that tracks and reports who, what and when specific brands are purchased let alone mere food types then implementing different taxes for different product is not nearly the cost burden it would have been a few decades ago.
But the cost of enforcement might still be an issue. Some scumbag will try and rort the system and there is a cost involved in having the IRD capable of detecting such a rort.
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Look, these things might have been hard to do in 1960 when the ledgers were done longhand with quill pens. We've got computers today and can process any rules the government want to implement.
Your technophiliac faith is touching, little one. Perhaps you could come around the next time I've got to try and make sense of my next computer generated student loan statement...
The Cylons do have a plan -- drive us all nuts so we will rush to embrace our hot blonde thermonuclear doom.
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Every EU state except Denmark has a reduced rate, and most have zero rates, as well as exempt items. There are also inter-state claimbacks and various other niggles, which business has no major problems with.
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But given most retailers run software that tracks and reports who, what and when specific brands are purchased let alone mere food types then implementing different taxes for different product is not nearly the cost burden it would have been a few decades ago.
I don't think it's a problem of the computer figuring it out. It's a problem of putting in place laws which can be sensibly implemented by a human entering data into the computer.
"Fresh produce" is pretty easy. That clearly includes my lettuce. Does it include the loose lettuce leaves that are in the same section? What about the pre-made salads in the next bay over?
Are nuts in their shells fresh produce? what if they're shelled but not packaged? What does it matter as nuts don't get worse for you by putting them in a bag.
But if it's about healthy foods, dried fruit are very healthy!
None of this is impossible to do. But there has to be good reason to do it and I'm unsure if a 3/23rd reduction in price does it for me.
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Don't let perfection be an enemy of the good!
Anything that enables people to buy more fresh fruit and veg is good.
The fact that the system won't be perfect is not a reason not to do it!
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To me the GST on fresh produce is pretty arbitrary. In theory it's to help people buy healthy foods, but it only includes some healthy foods.
The arguments over what is healthy are long and very messy. Especially since the science around what is known to be healthy is actually pretty undeveloped. There are a lot of small studies and even more anecdotal reports about healthy foods. But most of the hard science has been reductionist in nature - looking at specific compounds only. The scientists doing that work freely admit that when such compounds are blended in a whole food and then digested much of what is learned from the reductionist studies becomes irrelevant.
Last time I looked I actually couldn't find a study that showed that eating fruit improved health! The best long term study (the US nurses health study) showed no significant correlation between fruit and health*.
However, there have been quite a few studies showing various "foods" are unhealthy. A simple summary might say the more processed it is the more likely it is to be unhealthy.
So how do you make a reasonable pass at encouraging healthy food habits? Well there is pretty good data that suggests that eating things that you can recognise as being food is good ie unprocessed. And eating mostly plants rather than animals (mostly not exclusively) and eating not too much food is a pretty good rough guideline. This is Michael Pollan's thesis and I find it pretty compelling.
Having a tax policy that goes some way towards encouraging that seems sensible.
This punt by Labour isn't far off. If I were king I'd go further by taxing processed foods more (eg anything with lots of sugar in it) and I'd also probably take the time to work through exempting things like frozen peas which are by most measures better than peas that haven't been frozen.
But in the end it comes down to a nanny state argument. Should a government spend money (or not tax) in order to improve the health of the population OR should a government just let people make mistakes and die (slowly or quickly) as a result of those mistakes?
*I think there have been a couple of recent studies that show some correlation but I haven't read them yet.
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Any student loan correspondence I get seems to orginate in another dimension which is not a logically possible world; the mathematics of these pieces of paper I get sent resemble the architecture of Ry'leh.
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To make this work I think they'll have to change GST law from being a Value Add type consumption tax to a Sales type consumption tax but for Fruit and Veg only.
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I would happily vote for a party that removed taxes on all fruit, grains and vegetables that have been processed, as long as that processing involved fermentation and preferably distillation.
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Kyle,
It's not tricky to legislate for this. Existing food legislation *already* distinguishes between fresh, unprocessed, and processed foods.
This is is why, say, apples you buy at the supermarket do not have nutritional labeling written on them --- they are exempt from nutrition labeling.
So, there is absolutely no problem in legislation distinguishing different sorts of foods on this basis *it is already done*.
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NZ is regarded in the EU* as one of the few sane GST/VAT systems in the world, because it's flat with very, very few exemptions. NZ is held up as a gold standard of how not to f**k it up.
So please don't f**k that up for political points. It's a mess here in the UK (who have 0, 5% and 17.5% depends on what it is), and I'm told Australia isn't much better.
Aus was much worse (might have changed). A basic load of bread is 0% (it's a staple), but one from your local bakery is 15% (or whatever full GST is there). But it's all bread....
* friend of mine is very, very high up in the EU's VAT section (and in HMRC (UK's IRD) before that). Basically, he's one of the people who gets together with the other (french, german, etc) VAT heads and works out what the EU does in terms of VAT.
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