Some Massey University researchers are calling for GST to be dropped on fruit and vegetables.
As a general principle I am against any further exemptions to GST. We have a relatively simple indirect tax regime because it is not full of exemptions and loopholes. Australia’s GST is a mess by comparison as some “basic” food is exempt so plain bread has no GST but other breads do have GST.
But even if one puts aside that principle, the arguments by the researchers do not add up.
The average household spends $13.90 a week on fruit and vegetables. So the GST they pay is $1.54 a week on it.
And how much do the researchers claim should be spent every week – $31 to $59 – an increase of $17 to $45 a week. So getting rid of GST on fruit and vegetables will achieve only between 3.4% and 9.0% of the goal.
Definitely not a strong enough case to change the principle of universal application of GST.Tags: New Zealand