Labour heads left

May 6th, 2010 at 9:10 am by David Farrar

Vernon Small reports:

The Party is opening the door to policy change, including taking off food and clamping down on foreigners buying farms.

Phil Goff is trying to go to the left of Helen Clark. Taking GST off food is a daft idea. Mind you McDonalds will think it is a great policy.

And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

I wonder if Winston will sue Phil for stealing his policies? I mean they already share major funders, so sharing policies is next logical step. Maybe their shared name can be Labour First.

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70 Responses to “Labour heads left”

  1. wreck1080 (3,863 comments) says:

    I reckon, sell all our land to the chinese….then bring in land tax -woohoo.

    If labour did remove gst on food, where will they collect the lost revenue?

    Increase income tax probably.

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  2. Michaels (1,318 comments) says:

    And yet again Phil proves to all he doesn’t want to be the Labour leader long term….
    FOOLS!!!

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  3. Scorpio (412 comments) says:

    One possibly unintended consequence of removing GST off food, is that you can’t register for GST if you do not produce a GST product or service. If there is no GST on food, then McDonalds cannot claim back the GST they pay on their non-food supplies, and therefore they will either have absorb the cost, or leave their prices the same as they are currently – so effectively there will be no change in the retail price.

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  4. Pete George (23,425 comments) says:

    There are plenty of things McDonalds sell that isn’t food. They sell a lot of cardboard. And packaging. A prime example of how difficult it is to isolate food for GST exemption purposes.

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  5. m@tt (630 comments) says:

    McDonalds don’t sell food. They market an experience. I’ve been party to a meeting at which some fairly heavy weight people from that organisation discussed the concept. The fact that you can eat what they sell you is really not very important to them.

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  6. Bevan (3,965 comments) says:

    Just populist policies they will have no intention of implementing if they are elected.

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  7. Grizz (585 comments) says:

    Likely that value added services will have GST added, such as restaurants. However it will become a grey area as what is value added and what is not. For instance will sliced bread be GST exempt or not. What about supermarket cooked chickens. Anyway the compliance costs for GST will skyrocket.

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  8. Say Goodbye to Hollywood (556 comments) says:

    Poor old Phil, any policy in a storm.

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  9. wreck1080 (3,863 comments) says:

    People are stupid.

    While there is a perceived benefit at the cash register because the customer can see on the receipt that there is no gst on the food, the customer does not see the hidden costs. The hidden cost is the food price increases to cover increased compliance costs.

    If the customers receipt broke line items into profit/fixed/variable costs / tax then it would be clearer. A new cost is added to each line item, that is, ‘variable gst compliance cost’.

    Imagine the absudity – tax officials investigating supermarkets trying to determine if child lollies are food or not.

    NZ productivity will further decrease along such lines.

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  10. stephen (4,063 comments) says:

    Interesting-ish that he’d raise the top tax threhold to $100k – way up on what Labour was doing before, and only getting 3% of taxpayers (wonder if he’s a bracket-creep kinda guy). Takes a bit of the hurt off raising the top rate back to 38…

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  11. krazykiwi (9,189 comments) says:

    Yes, wreck1080 is on to it re visible vs hidden costs. Add to that the funding required for the Department of Food Tax Compliance, the Food Tax Treaty Settlement Commission and Food Tax Disputes Tribunal. Perhap Labour could put Parakura Horomia in charge of the latter.

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  12. Jeff83 (771 comments) says:

    I think the perceived issue with selling to foriegners farms is currently we give farmers preferential treatment in terms of waste (run off into waterways) and other issues they lobby for due to them being a economic neccessity to our economy. By selling to foreigners they would effectively be getting preferential treatment but not giving the benefit we mainly derive, i.e. our balance of payments being not more terrible than it is.

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  13. Ryan Sproull (7,093 comments) says:

    Taking GST off food is a daft idea. Mind you McDonalds will think it is a great policy.

    Yeah, they could start buying some and adding it to their menu.

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  14. RRM (9,769 comments) says:

    Correct: A great big chasm where the farm owner’s discretionary spending used to be. This isn’t nothing.

    Bad GST idea though.

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  15. Monty (974 comments) says:

    Goof is a phool in full panic mode – anything for a few extra votes. His biggest problem is that he is so irrelevant that no one is listening.

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  16. ben (2,418 comments) says:

    Here is why this is such a bad idea.

    Goff will try to find a way that means GST is still payable on McDonalds, but not Subway. Let’s say he does it by defining the maximum percentage fat of a meal.

    Two things will happen. One, McDonalds will lawyer up and spend millions to redefine the meaning of fat, or natural products, etc. They will not do this because they are evil, comrades, but because Phil Goff has just made it highly profitable for them to do so.

    Second, McDonalds will make minor adjustments to their menu. A little more bread, a little less mayo, etc, to sneak under the bar. Yay, GST-free Big Macs.

    The other thing that will happen is Subway will lobby furiously for McDonalds not to be exempted. They will lawyer up and oppose everything McDonalds does.

    Another thing will happen. Muffin makers (say) will be unintentionally caught because an unanticipated effect of Goff’s definition catches their product. So they lawyer up and lobby government for exemption for products containing blueberry, white chocolate and pecan.

    Furthermore, makers of edible undies and lollipops, who are close to the exemption but didn’t quite make, also hire a team of lawyers for an expansion to the exemption. They will also employ teams of scientists to figure out ways to get lollipops into the definition required for an exemption without sacrificing lollipop flavour.

    In all, you have teams of highly trained and talented people arguing what sugar really means and whether an extra few blueberries qualify for exemption or not. This is known as dead weight loss.

    Naturally, National will think this is a great idea and will pick up Phil Goff’s brilliant plan. It’s not even his area but I can see Steven Joyce standing in front of cameras explaining the goodness of GST exemptions.

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  17. RightNow (6,966 comments) says:

    To be fair, I think McDonalds also thought it was great that they got subsidised for hiring staff off the long term unemployed list.
    We seem to bumble from one kakistocracy to another, it’s a very shallow pool of talent to elect from, can’t we ECAN all the politicians and replace them with a commissioner?

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  18. aardvark (417 comments) says:

    Selling our dairy farms into foreign ownership is somewhat akin to selling the goose that lays the golden egg.

    Look at how much our dairy production contributes to our export ledger…!

    Just look at what’s happened in the past when we’ve sold highly profitable NZ-owned enterprises into foreign ownership — we end up regretting it and paying the price for our myopia.

    This is a level of stupidity that ranks right up their with giving away our mineral resources in return for creating a few jobs and receiving a token amount of tax on the wages of those workers.

    My goodness, can’t any politician in this country think beyond the limits of the 3-year political term?

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  19. gravedodger (1,545 comments) says:

    Mr Goff is onto a couple of winners here. Think about how many more Public Servants will be needed to administer the moras that Gst compliance will become. Quaint in a funny sort of way, expanded P S administering a diminishing gst tax take and they will all be labour supporters.
    Then the official amalgamation of winston first and labour last to form an entity that will be deadbeat, with winnie and phill as co joint leaders and One P. Ure as a foundation supporter, that will indeed be winner number two.

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  20. burt (8,183 comments) says:

    DPF

    Labour First has been suggested before;

    http://www.kiwiblog.co.nz/2008/09/henry_changes_story.html#comment-485898

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  21. GPT1 (2,116 comments) says:

    Anyone asked why GST on food was OK for 9 years?

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  22. Murray (8,844 comments) says:

    VOTE FOR PHIL!

    Because Helen was scosialist enough!

    Good thinking on that marketing strategy.

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  23. Ryan Sproull (7,093 comments) says:

    More bloody socialist tax cuts.

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  24. Chthoniid (2,029 comments) says:

    I can’t believe that this issue keeps coming up. It’s been ongoing since 1987 when GST was introduced. The issue is dead, it’s just a dumb idea.

    The purpose of a tax is to raise revenue, that’s it. GST does that effectively at a relatively low admin cost because of the no-exemption clause & the difficulty of evading it.

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  25. Pete George (23,425 comments) says:

    Cunliffe told Radio New Zealand the proposed move has not yet been discussed by the Labour caucus.

    Has it been leaked before being discussed? Or is it a deliberate drip feed to try and generate some traction?

    The whole way it’s being done doesn’t make sense.

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  26. idiotboy (67 comments) says:

    There are four good reasons to take GST off food:

    ‘One, because the GST hike is imminent. Two, because there is a lot of talk about the desirability of pursuing a single Australasian market, and Australia operates their allegedly complex food exemption so smoothly and cost effectively that compliance is no longer a contentious issue over there. Three, because in December, the Australian Tax Office unveiled a computerized model that makes GST food and beverage compliance extremely easy to manage, and four, because a major New Zealand research study released in March has proven that if supermarket customers were given a 12.5 % price discount, an almost dollar for dollar higher investment in healthy food will result, and will be still observable six months later. Cutting GST on food in other words, would will result in lasting health benefits.’

    http://werewolf.co.nz/2010/04/do-the-right-thing/

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  27. Inventory2 (10,262 comments) says:

    Some things never change – Labour is till getting the taxpayer to pay for everything

    http://keepingstock.blogspot.com/2010/05/who-paid.html

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  28. redeye (638 comments) says:

    I’ve developed software for many a food producer in Aust. who have no GST on fresh food, Medical care, educational supplies and a couple of other miscellaneous items.

    The compliance costs are not as great as most are making out. Most accounting software and cash registers can handle the issues raised here.

    Once you have a ruling the rest is automatic.

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  29. Murray (8,844 comments) says:

    Chthoniid taxes are actually a device for social regulation and engineering. Its the socialist wet dream to make everyone a beneficiary of some kind to secure their vote.

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  30. ben (2,418 comments) says:

    iPredict is running a contract asking if food will be exempted. Currently: no. Likelihood = 8%

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  31. nickb (3,686 comments) says:

    As ben has explained very well earlier, adding exemptions here and there for GST would be a fuck-up of mammoth proportions.

    All it would create would be nonsensical and bizarre inconsistencies, loopholes, and mountains of admin costs.
    It would send millions of dollars straight into the hands of lawyers and accountants, while doing no other good whatsoever.

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  32. Michaels (1,318 comments) says:

    I’ve been pondering…….
    Was Phil Goff always so stupid?
    I mean, for all his years suckling from the public tit, was he ever as stupid as he has been since becoming leader?

    So I got to thinking a bit……..

    Is he really just the front person that has to look like a dick every time he opens his mouth and is it Little Andrew that is getting ready to pounce all set for the election???????

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  33. Pete George (23,425 comments) says:

    redeye: Once you have a ruling the rest is automatic.

    Still problems though:
    – determining the rulings can be a major resource hog
    – businesses should be focused on selling goods and/or services, not on how to beat the system
    – many small businesses simply divide totals by 9 to calculate the GST component, with variable rates this isn’t possible

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  34. jinpy (237 comments) says:

    shouldn’t that be 8…? Or possibly 9/8ths to get non-GST total from GST total….?

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  35. jinpy (237 comments) says:

    Silly arguments in this post, as aardvark points out you don’t need to move land overseas to make money from it as a foreign investor.

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  36. side show bob (3,660 comments) says:

    Dairy farmers sell food is “put it on the bill phil’ saying we won’t have to pay GST, Philin for PM :-)

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  37. redeye (638 comments) says:

    Rulings can be an issue I agree. Things like, is imported pita bread, bread? Cause it’s only fresh food. Maccas & KFC still pay their wack.

    I doubt many would be trying to beat the system. Businesses don’t pay GST.

    Anyone selling any volume these days would have software or an intelligent cash register.

    My experience is, all of these arguments were raised prior to the lying little rodent introducing it in 2000 but it’s hardly been an issue since. It’s not that bigger deal.

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  38. big bruv (13,675 comments) says:

    This is disastrous for NZ.

    If Goff and Labour head even further left it enables Neville Key and the rest of the gutless National Socialists to stay on their current centre left path.

    Only National party cheer leaders will welcome this move from Labour, the rest of us should hope and pray that Goff is rolled soon and somebody with a bit of ability takes over.

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  39. Pete George (23,425 comments) says:

    Jinpy:
    100.00 plus 12.5% GST is 112.50
    Divide 112.50 by 9 and you get 12.50 which is your GST

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  40. Hagues (711 comments) says:

    DPF “Phil Goff is trying to go to the left of Helen Clark.”

    I guess he sees it working so well for Key & National he wants to give it a go too.

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  41. Bevan (3,965 comments) says:

    I doubt many would be trying to beat the system.

    Your shitting me right? You really believe that anyone would happily pay what the could get out of? Fuck I dont agree with WFF, but if I’m entitled I’ll still claim it as it will make me and my family better off.

    Businesses don’t pay GST.

    What makes you think that food prices will go down? I doubt very much that any food provider will drop their prices by the whole 12.5%! If they can get away with it, then it will be more like a token 5% drop.

    Anyone selling any volume these days would have software or an intelligent cash register.

    Yes, cause all the corner dairys Ive been too recently have brand spanking new cash registers, and the shiniest PC out back with the latest tax software on it….

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  42. JiveKitty (869 comments) says:

    Xenophobia for the win. Hell, they get two constituencies with this policy. They get the xenophobes and they get the paranoid ones who think that foreigners will rape the land and its natural resources for maximum short-term profit extraction then get the fuck out. This could be a somewhat legitimate concern as foreigners typically won’t have the same attachment to land and country that someone who resides here does and they may have different cultural values and ways of doing business, but then, someone who resides here is not guaranteed not to operate in a similar manner or have values and/or ways of doing business that are not different to the norm.

    Removing GST on food sounds like a nice policy until you realise there are better ways to change the desired distribution of resources than making a tax system increasingly complex. The implication of such a removal is concerning as it suggests that Labour are deciding what is good and necessary for society. Food would be universally accepted – although which types may be contentious, but if Labour is willing to make an exemption here, what is to say it won’t lead to lobbying for further exemptions on “necessary” goods and services? It’s a dangerous move to make.

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  43. Manolo (13,517 comments) says:

    Electing Labour would be like jumping from the pan to the fire.

    A bunch of tired, old socialists determined to ruin New Zealand. That’s what the Labour Party follows: an obsolete ideology.

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  44. Nick Archer (137 comments) says:

    Dumb moves by Goff and Labour.

    Firstly they protest the hike in GST to 15% from 12.5% with an Ax the Tax campaign (which would also suggest they would get rid of GST altogether by the way) under the guise of protesting the 2.5% increase.

    Secondly with such a campaign (that had been rolled out) you would expect them to set a policy to drop it back down to 12.5% when they get in, but no! They instead come up with excuses (same excuses as Bill English gave for the increase to 15%)

    Thirdly they now want to cut it off food which despite its noble intentions will make it even more grey and murky…

    Instead if they had any real substance they would have followed a consistent line i.e. do your campaign (ax the tax) on something that is realistic (i.e. commit to your alternative to the perceived problem for their constituency base and tailor a campaign that is consistent and congruent with that) and not muddle around and come up with this…

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  45. redeye (638 comments) says:

    “You really believe that anyone would happily pay what the could get out of”
    As I said. Business don’t pay GST so what is there to get out of?

    “What makes you think that food prices will go down?”
    I was working on the premise promoted by most in here. It’s called competition.

    And yes, most corner dairies do already have cash registers capable of handling GST and Non-GST items.

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  46. jinpy (237 comments) says:

    Pete, thanks for that! yes, i see now, i was so close …. ;-)

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  47. Bevan (3,965 comments) says:

    I was working on the premise promoted by most in here. It’s called competition.

    If there was true compitition, we would be paying a hell of a lot less for our food products.

    And yes, most corner dairies do already have cash registers capable of handling GST and Non-GST items.

    Where? Remuera? Go to a dairy in BeachHaven or Birkenhead and ask them if their POS equipment will handle it.

    Not everyone has the resources of a MacDonalds or Woolworths who can invest in the latest equipment if they choose.

    Your mistake is that you are solely looking at the tax collection from the POS. Think about the regulatory requirements for implementing this, what food will be exempt? I can absolutely guarentee you that the NZ public will not support the likes Macca’s and KFC being able to sell their goods without GST, therefore the GST would be removed from only healthy food. How do you define healthy food? How does that get enforced? How do we regulate the sale of Healthier food GST free, while collecting GST off unhealthy options?

    Will we end up spending more on a regulatory body to define and enforce the rules, than would be saved by the tax payer from the GST on food.

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  48. transmogrifier (522 comments) says:

    If you are going to have GST, it must be on everything. Exceptions just make things needlessly complicated for little or no reward.

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  49. menace (407 comments) says:

    I for one would like to see less of new zealands limited assets sold off shore.

    What do others think on that part of the topic, not many have commented on it?

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  50. Manolo (13,517 comments) says:

    I for one would like to see more of New Zealand’s assets sold off-shore.

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  51. RichardX (326 comments) says:

    Redeye – Of course businesses pay GST. They deduct the GST they have paid to their suppliers from the GST they have collected from their customers and pay the IRD the rest. Sometimes this may be a refund but that means they are losing money and so probably won’t be in business for long.

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  52. philu (13,393 comments) says:

    “..# Michaels (853) Says:
    May 6th, 2010 at 9:17 am

    And yet again Phil proves to all he doesn’t want to be the Labour leader long term….
    FOOLS!!!..”

    i disagree..

    goff/labour are (finally!) showing themselves as different from key/national..

    it will work a treat…

    phil(whoar.co.nz)

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  53. philu (13,393 comments) says:

    from the reactions from both farrar…

    (a fan of vertical foreign-ownership of our ‘assets’..?..are ya..?..ok with them getting all the profit from the field to the table..eh…?..)

    ..and from the commenters on this thread..

    ..that this idea/policy has them running scared..

    ..mainly ‘cos he/they know what a vote-winner it will be…

    ..eh..?

    and could well be the death knell for key/this govt…

    ..eh..?

    phil(whoar.co.nz)

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  54. redeye (638 comments) says:

    RichardX. Businesses don’t pay GST, shape it anyway you like.

    Bevan my mistake is that I’m debating with an idiot like you. Australia has GST exemptions for FRESH food. As I already said. Maccas and KFC still pay their wack.

    Defining fresh food has it’s challenges but they manage over the ditch without too many drawn out legal challenges.

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  55. menace (407 comments) says:

    Manolo, why is that?

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  56. minto57 (197 comments) says:

    Xenophobia is healthy for a country of our size.
    But the loony right just cant help themselves they have a obsessive compulsion to sell the bussiness rather than create.

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  57. RichardX (326 comments) says:

    Redeye – I guess you’re arguing that GST is purely a cost to the business that they pass on to their customer but, as a business owner, I know what would happen if I declined to collect this tax on behalf of the government and them pay it to the IRD

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  58. redeye (638 comments) says:

    No I’m arguing that it’s not a cost to business. (well except for the cost of physically collecting it)

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  59. Bevan (3,965 comments) says:

    Bevan my mistake is that I’m debating with an idiot like you. Australia has GST exemptions for FRESH food. As I already said. Maccas and KFC still pay their wack.

    Defining fresh food has it’s challenges but they manage over the ditch without too many drawn out legal challenges.

    You must have missed the questions:

    How do you define healthy food?
    How does that get enforced?
    How do we regulate the sale of Healthier food GST free, while collecting GST off unhealthy options?

    All this requires money to set up. Money that will come from tax. Whatever collective amount saved by consumers in reduced cost on food (and I doubt that food will drop by the appropriate amount!) will be eclisped by the cost of setting up the regulatry monstrosity that would be needed.

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  60. Rex Widerstrom (5,343 comments) says:

    And it is vital we must stop farmers from being able to sell their farms. Imagine if a foreigner buys a farm. One minute it is sitting there in the Waikato, and suddenly the foreigner has packed the farm up and moved it overseas. The dirt, the grass, the cows, the sheds – all gone. Just a big chasm left in the earth.

    Oh very droll. So you considered it just peachy when Tommy Suharto bought up a huge chuck of the South Island via investment in a sheep station, then? It’s a bit like that other rort NZ First exposed (back in the day when it stood for something), the “investment” by “business migrants” in palatial Auckland homes. Aside from the developers, no NZer profited one iota from this “investment”… we were simply being conned for permanent residency status and, eventually, citizenship, by people who didn’t even bother to reside here.

    I’m not suggesting we don’t sell our land (or our forests, or our fisheries etc) to overseas owners, just that we do so intelligently, with an eye to what’s best for New Zealand and New Zealanders. We haven’t done so up till now, and we’re paying the price for that.

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  61. Hurf Durf (2,860 comments) says:

    GST off food was RAM’s signature policy. They disbanded, but they certainly didn’t go away.

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  62. Yvette (2,761 comments) says:

    So major points of concern seem to be . . .

    You can’t register for GST if you do not produce a GST product.
    Can McDonalds [or any other food outlet] therefore claim GST on non food components like packaging?
    Will GST be removed from only ‘essential’ foods?
    Or fresh foods, and what constitutes fresh?
    What vitamins and other pharmaceutical items are food?
    and Edible undies!

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  63. redeye (638 comments) says:

    “You must have missed the questions:”

    Who’s suggesting using the word “healthy” as an exemption clause? FRESH!!!!!!! Which in Australian terms is broadly defined as non-manufactured plus bread as it is a stable.

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  64. Caleb (479 comments) says:

    you can already buy fresh food from the market or roadside stall gst exempt.

    i want an income tax rebate on all fresh food i buy….

    a lot better ways of getting people to eat fresh vegetables than the possabiltiy of a full 9% price reduction.

    i support giving every child at school a free broccoli once a week…

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  65. lofty (1,305 comments) says:

    @philu

    may I ask you why you are such a cheer leader for the labour party on this issue?

    Surely your beloved greens could stand on their own 2 feet and win an election without the labour party phil.

    Even in the unlikely event that this center left govt did lose the next election, your beloved greens would still be the lapdogs of labour and never get the chance to do anything “green”.

    None of your LIST MP’s would ever get a chance to implement REAL policy, you and your beloved greens really need to stand on your own 2 feet phil.

    Go on have go son, win an election on your own merits.

    Can you???? I dont think so.

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  66. krazykiwi (9,189 comments) says:

    Labour moves left

    I think you’ll find that NZ’s entire political spectrum has slid inexorably to the left, with ACT today being further to the left of Labour in the 80’s. We are now firmly in the grip of an entitlement epidemic, the corrective (or even arresting) medicine being avoided by successive governments who have proven themselves more concerned about their own political bauble’s than the future of NZ.

    There are one or two European countries that have following the same socialist path. Greece (pop -3) springs to mind.

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  67. Muzza M (291 comments) says:

    I think Labour should change thier tactics. Instead of dumping on everything the Nats do, they should be saying they would have done the same. There is very little difference in what the Nats are currently doing and what Labour previously did.

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  68. Clint Heine (1,570 comments) says:

    I don’t see the problem here. Anything Labour does now, that is ridiculed by National will be eventually be picked up by National in the long term. The worst thing is that many of you will agree with it despite laughing at it now.

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  69. philu (13,393 comments) says:

    the potency of this idea/policy is emphasised by keys’ knee-jerk/shock!/horror! reaction…

    ..eh..?

    and of course..any exemption should only be for fresh food…

    ..not for that fat/sugar/salt/laden muck..that is most processed food…

    ..or..coca cola..eh..?

    phil(whoar.co.nz)

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  70. wikiriwhis business (3,883 comments) says:

    Why is taking off GST from food a daft idea.

    What with the Environment Trading Bill adding more stress to society pushing the cost of living up, society needs a vent and taking GST of food would be a brilliant start.

    I am quite seeing the narrow side of David Farrar, with his attitude to agreeing with the concerted attacks against all levels of education and his awful approval of a 10 y o boy shot point blank in the head. Even though it was only a film. Still a shocking indictmenet of a public figure. (who doesn’t have to worry about votes)

    Mr Farrar is obviously in favour of marginalising a bigger portion of society and and cutting out more of the middle class.

    His views on de population would also be predictable.

    But at least we have an idea of how his colleagues in parliament think.

    He is certainly a beacon of what we can expect in the future that the pollies themselves would never utter publicly.

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