GST on Fruit and Veges

December 2nd, 2007 at 8:51 am by David Farrar

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.

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20 Responses to “GST on Fruit and Veges”

  1. Danyl Mclauchlan (1,069 comments) says:

    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.

    National Activist Opposes Tax Cuts!

    Seriously though, the idea is for families to spend more on fruit and veges and simultaneously reduce their spending on soda drinks and chippies (and so forth).

    What we lose on the GST intake we save on the insulin prescriptions and bypass surgeries a couple decades down the track.

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  2. Insolent Prick (417 comments) says:

    Danyl:

    The issue isn’t actually about lost revenue: it’s the compliance costs and hoops that people have to jump through. Why remove the GST on only fruit and vegetables? Is the issue actually about nutrition? Why not remove it on red meat as well? Then why not remove the GST on other food that is just as nutritious? Do you charge GST on not for concentrate fruit juices as well? Do you remove the GST on canned fruit and vegetables, as well as fresh fruit and vegetables? How about a prepared fresh salad at the supermarket? Does that carry GST? What if the salad has chorizo sausage in it?

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  3. dad4justice (8,222 comments) says:

    Can they remove GST on headache pills, as that sick old cow Klark makes my head hurt ?

    [DPF: 10 demerits for off topic - Clark has nothing to do with this thread]

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  4. krazykiwi (9,186 comments) says:

    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.

    Amen to that. Take chicken. Traded live it one GST rate, frozen for sale in a supermaket it attracts another rate, sold in unfrozen pieces it attracts another and when served in a restaurant meal yet another!

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  5. ele (22 comments) says:

    Good tax is probably an oxymoron but simple tax is better and any exemptions would complicate GST.

    The problem is not that people don’t earn enough and are taxed too much on what they do earn.

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  6. ele (22 comments) says:

    whoops – the problem is not GST but that people don’t earn enough are are taxed too mucyh on what they do earn.

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  7. Richard (130 comments) says:

    Typical social studies lecturers. Find a problem via some robust research – we need to eat more fruit and vege. Then just slap on some barely thought out policy prescription from an area they’re completely out of their depth in – tax’s effect on behaviour – and take their hair brained idea as seriously as their actual research.

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  8. John Dalley (394 comments) says:

    The reasoning for one GST rate was exactly for the reasons that KK describes, all sorts of compliences costs would be incurred administering the sceme.

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  9. TaylorB (2 comments) says:

    I agree if one using the same argument you could increase GST on things that were not healthy .
    Not a good idea. GSttneeds to be simple.
    The answer is education about nutrition

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  10. Tauhei Notts (1,714 comments) says:

    Years ago Trevor de Cleene told us that every pressure group in society was telling them that there were overwhelming reasons why their product should be exempted from GST.
    In the background were Treasury officials urging them not to relent.
    What a pity that Labour no longer have members with the late Trevor’s honest resolve.

    In Britain food is exempt from VAT. Textbooks that take up a full shelf differentiate between confectionary (taxable) and food. Imagine how much chocolate must go into a biscuit before it trips the line over to confectionary. Mind boggling.

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  11. francis (712 comments) says:

    Simplicity in administration is a worthy goal but the GST rate here does punish consumption in a big way and that punishment is particularly felt by those without much purchasing power to begin with. Yes, I know the well off put more GST into the coffers.

    And exemptions needn’t be all that difficult to administer – here’s how it’s done (on a state-by-state basis, because there is no national sales tax, in the US): http://www.taxadmin.org/fta/rate/sales.html . Most states imposed sales tax on “prepared” food and yes the designation can be tricky but it is easily barcoded in and the rules actually are pretty straighforward: http://tinyurl.com/3a779h for Minnesota.

    Mostly, it’s a matter of giving people an extra spending boost of 12.5% in their food budget – and if the choice is down to meat or no meat, that’s a lot.

    Going even farther, I don’t think that part of any price that already constitutes a tax of any sort should attract GST, but I’ve given up on that one.

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  12. big bruv (13,904 comments) says:

    DPF

    “[DPF: 10 demerits for off topic - Clark has nothing to do with this thread]”

    We all know that D4J is a hot head however you need to stop this holier than thou attitude.
    The pinko’s will stop at nothing to steal next years election and they sure as hell are not going to play by Queensbury rules.

    This is going to be the dirtiest of election campaigns/fights, we (those who want to see the back of the Bilious bitch) need to fight them tooth and nail, the old stiff upper lip stuff will not work.

    Come on David, I thought they bred us a bit tougher than that at Rongotai.

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  13. dad4justice (8,222 comments) says:

    To be fair to David Farrar I understand my comments talk a fine line and even I find them hard core , however with that said , this is going to be a very dirty election and I am just putting my gloves on .

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  14. Owen McShane (1,226 comments) says:

    Within ten minutes of introducing such an exemption Labour would decide that luxury foods would have to be taxed – and begin to compile a list beginning with fresh dates, grapes, pineapples, mangoes, and then someone would point out that organic fruit and vegetables are an obvious luxury having no superior nutritional qualities to normal non metallic fruit and vegetables.

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  15. francis (712 comments) says:

    You’re probably right, Owen.

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  16. Zippy Gonzales (485 comments) says:

    Next they’ll be wanting hybrid cars exempted too. Then we’ll be with the Ozzies, wondering whether cooked or raw chickens should be excempt, or why tampons are excempt but condoms aren’t.

    No. Fricken. Way.

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  17. Seamonkey Madness (328 comments) says:

    “The average household spends $13.90 a week on fruit and vegetables. So the GST they pay is $1.54 a week on it.”

    Shit David, I don’t know where they do their shopping, but I want in!

    “And how much do the researchers claim should be spent every week – $31 to $59″

    That’s more like it. Me and the missus have already spent at least $30 by the we’re out of the fruit and veg section at Pak n Save. Pak n Save people!! We’re not talking Foodtown here – we’re talking the cheapest supermarket F & V you can get, and it still adds up to $30/week.

    But as you say David, a weak case to put forward.

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  18. AndyC (28 comments) says:

    Food costs have shot up for our family, the fortnighly shop and P&S will set you back around the $280 mark , I had a double take at a 1kg block of colby cheese from mainland is $12.95 two days ago. If we got gst off of unprocessed food we would probably save $30-40 a fortnight.

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  19. hinamanu (2,352 comments) says:

    G S T should definitely be removed from fruit and veges. they are staple foods and shold not be restricted by even a cent more then necessary.

    Any party who campaigned on this issue and showing to be leading by example would win an election hands down.

    Some people on this blog say they respect you so much DPF (and should be demerited for obvious greasing) but you show you have no compassion or understanding for the marginalised and how much a little kept to them selves can have an enormous impact on their health and well being.

    But no party, not even the Maori Party, speak against obsolete GST in any form what so ever. I find that gutless and galling.

    P S,, I see JUSTICE is coming along nicely :)

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  20. chandler frank (5 comments) says:

    as a matter of fact:
    http://www.google.co.nz/url?sa=t&ct=res&cd=1&url=http%3A%2F%2Fwww.scoop.co.nz%2Fstories%2FPO0805%2FS00048.htm&ei=NpgdSKGRE6XopgTthazgCQ&usg=AFQjCNFrg_nAD59DyMVrW1gvq71rCfV5SQ&sig2=q61geENvx0LgYqUEhWtfsw

    I see one party campaigning on GST removal

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