$1 a week more

September 27th, 2010 at 3:50 pm by David Farrar

Bill Engligh writes:

’s unfunded policy to remove from fresh fruit and vegetables would deliver only $1 a week for the average Kiwi – and much less for low income earners, Finance Minister says.

The estimated $250 million cost of the new policy would have to be paid for by extra borrowing, pushing up already fast-rising public debt. …

The $250 million annual cost of the move, divided among all New Zealanders, is worth, on average, just over $1 a week – less for low income earners and more for high income earners.

“This puts the Government’s tax switch, which will leave the average income earner $15 a week better off, into perspective,” Mr English says.

But here is the real ripper:

“It’s also worth noting that fruit and vegetable prices have actually fallen by 11 per cent since National took office, having jumped 54 per cent under Labour.”

The removal of GST will have a relatively minor impact on overall fruit and vegetable prices and affordability, compared to normal price movements.

This is a point Danyl also makes at the Dim Post:

The real flaw with the policy is that its just a gimmick. I’ve written before about how the price difference between fruit and veges at the supermarket and the farmers market down the road is several hundred percent.

I predict that if Labour ever got to implement their policy, it would have next to zero effect on the uptake of fruit and vegetables.

Bill continues:

“Labour’s policy makes no sense and smacks of political desperation,” Mr English says. “Phil Goff must explain to New Zealanders why he is removing GST from imported, out-of-season raspberries and asparagus, but not from New Zealand frozen peas, which are a nutritious part of many Kiwi meals.

“People would be able to buy GST-free potatoes, take them home and make deep-fried chips. But at the same time, healthy foods like Weetbix, low-fat milk and wholegrain bread would be subject to GST.

Distinguishing between fresh and frozen vegetables is just the start of the stupidities that this policy would lead to.

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67 Responses to “$1 a week more”

  1. JayMal (29 comments) says:

    Goff also says it was implemented in Aussie with minimal cost… anyone else here remember what a nightmare it was when GST came in over the ditch? Accountants and software companies made squillions on it.

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  2. Rich Prick (1,542 comments) says:

    I’m concerned that Labour’s policy will not see GST removed from truffles and other delicious fungi.

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  3. Adolf Fiinkensein (2,793 comments) says:

    When you are polling at 8% you can say anything and nobody will remember by the time your party has another chance at power in twenty years’ time.

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  4. Inventory2 (10,099 comments) says:

    DPF – we know that this is stupid policy by Labour, and it seems that commenters to the Herald’s Facebook site think so as well.

    http://www.facebook.com/nzherald.co.nz

    So rather than castigate Labour, why don’t we encourage Goff and Cunliffe to come up with more headline-grabbers? It seems like the right thing to do!

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  5. Bevan (3,965 comments) says:

    Yes JayMal, Goff does say that – but does he actually know what Australians REALLY want? Or what the issues really are with GST over here – I would say no.

    Posted this in the previous thread.

    http://www.news.com.au/money/money-matters/readers-call-for-an-overhaul-of-the-gst/story-e6frfmd9-1225929755186?area=money

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  6. Pete George (22,804 comments) says:

    Goff also says it was implemented in Aussie with minimal cost

    Where did he say that? Wasn’t it implemented in their GST from the start? If so the cost would have been a part of the whole cost, impossible to determine separately, and quite different to implementing it into the stable functioning GST system we have.

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  7. poneke (280 comments) says:

    It wouldn’t reduce fruit and vegetable prices one bit.

    Fresh produce goes up and down in price every day based on market values.

    Shops always sell them for $2.99 a kilo and so on. They would continue to do this, and reap the benefit of a GST reduction for themselves, not pass it on to consumers. It would be impossible to police such a matter, given the daily fluctuations of market prices.

    Similarly, come this Friday, the local New World will not start selling bananas for $3.07 a kg rather than $2.99 just because the rate oif GST is increasing. They will stay at $2.99.

    In Australia, some items of fresh meats, vegetables etc are GST-exempt. They cost much more than the equivalent products in New Zealand. Consumers would not know what is GST-exempt or GST-added because the shelf prices only quote the total price, as in New Zealand.

    As Labour will not win the next election anyway, it’s really all a bit academic.

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  8. Kimble (4,379 comments) says:

    Poneke,

    Labour would also make a rule that prices MUST fall by the amount of GST being removed, and if store owners dont comply they will be charged with a crime against The People.

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  9. GPT1 (2,088 comments) says:

    The point about price fluctations is well made. Given potential changes of 100% plus depending on season and availability GST removal will make very little sense.

    If they’re that keen on people eating well why not fund some gardening courses and free seeds.

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  10. lastmanstanding (1,204 comments) says:

    Wow!!!!! So I could buy half a kilo of apples a week with the savings under Labour.

    Let me think???? Is that enough to get me to Vote for the Socialists???????????????

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  11. kowtow (7,614 comments) says:

    What about shitty controlled atmosphere second rate NZ apples that are bruised and pitted and are definitely not fresh?
    And Bill is dead right about those frozen peas!

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  12. Kimble (4,379 comments) says:

    This is a great proposal! Thanks to the savings I make on fresh fruit and veges I will have more money to buy chocolate, alcohol, and cigarettes!

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  13. alex Masterley (1,490 comments) says:

    My preference is frozen peas and corn.
    The reduction in GST in our weekly shop of about $400(GST inc) ($50 of which is fruit and vege) would be something in the vicinity of $6.00 Whoo-hoo.
    Now what can I buy with that?

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

    Phil of it is just pandering to the uneducated lower class socialist in a vain attempt to remain relevant. Shit anyone with half a brain can see this is a party drowning and will try desperately to make an issue of the trifling and piddly,anything to keep themselves afloat. Give it up noddys. How about some real polices or have you fucked the country over enough and are out of ideas on how to make it worst?.

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  15. IHStewart (388 comments) says:

    Two years in opposition and this is the best they can come up with. They are clutching at straws unaware that they are drowning.

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  16. RightNow (6,655 comments) says:

    alex Masterley – is that weekly shop ($400) just for your family? For our family of 4 we spend about $200 and less than $20 is fruit and veges (from the sunday market).

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  17. James Stephenson (2,024 comments) says:

    @ alex – I dunno. Two packets of chewing gum?

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  18. RRM (9,445 comments) says:

    In the summertime there is plenty of Fennel growing wild like weeds along all the paths around Kelburn and Brooklyn. Harvest this for free, and help your local natural environment at the same time. No multi-million-dollar gummint intervention needed. It’s great in salads too..

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  19. Paul Williams (876 comments) says:

    Somewhere in the deep recesses of my mind, I recall John Key suggesting scrapping GST on petrol. Perhaps that’s a better idea.

    David, surely the calculations you’ve cited are based on existing consumption patterns which you’d expect would alter from a price decrease; isn’t the theory of competitive equilibrium compulsory reading round here?

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  20. gravedodger (1,514 comments) says:

    Bugger bugger bugger, now the bloody socialists want to reduce the savings I make by growing about 90% of my fruit and vegetables as I willl no longer save the bloody GST component but the seeds, fertilizer, shade cloth, weedmat and various poisons I employ will still attract the bloody TAX
    I AM NOT GOING TO VOTE FOR THE BASTARDS, hang on I didn’t. did I ?

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  21. jaba (2,089 comments) says:

    I can see it now, Peter and Susie of Manurewa (Labour just love giving examples of real people, Dyson does it all the time) doing their weekly shopping and get their normal apples/oranges/kiwi fruit (which vary from week to week in price anyway) and thinking .. mmm, the $10′s we spend, lets say on average, will now be just $8:50, lets buy 2 more bananas luv, thanks Labour.
    there are only so many items you can buy and keep fresh so there would be a reasonable chance the bananas would go off anyway.

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  22. alex Masterley (1,490 comments) says:

    rightnow.
    Yup thats about average. I have 2 boys who eat industral quantities of food.

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  23. HarryGlicken (12 comments) says:

    Darn this subject is getting you in a twist David Farrar, take a LOOOOONG trip to an exotic destination AND POST THE PICTURES for us, get away from the low paid fuckwits who read your blog and can still afford xtra broadband(ps i think us redundant bludgers out number the Farrars in NZ now) um theres a army of husbands who dont exist in any stats these days,wifes work so the hubby (unemployed)doesnt exist)HONY KEYS is DUMB, he believes the stats

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  24. Jimbob (640 comments) says:

    I do not know what the fuss is about. We all know that this Labour party is a few sandwiches short of a picnic. What worries me is that most of the higher IQ people are leaving New Zealand, and will pick up speed as this very long recession continues to bite. This will leave the majority of Labour voters left. God save New Zealand.

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  25. burt (7,806 comments) says:

    It might only be $1/week for the average Kiwi but the difference between the salary of the leader of the opposition and the PM makes this kind of popularist economic vandalism worthwhile. The end always justifies the means if it helps the socialists hold onto power.

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  26. Inventory2 (10,099 comments) says:

    @ jaba – check out the real live example that Labour is using in its GST brochure

    http://keepingstock.blogspot.com/2010/09/monday-quote-28092010.html

    A Labour candidate, no less. I wonder how many people are enrolled to vote from HIS address!!

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  27. jakejakejake (134 comments) says:

    also from the dimpost
    “If it is just the GST exemption for fruit and veges I predict lots of pious wailing about the simplicity and integrity of the tax system (exemptions are only good when they benefit companies and high net-worth individuals, not ordinary people) and lots of ontological idiocy about whether fried chicken is a fresh fruit or vegetable: ‘Won’t we need thousands of lawyers to figure that out?’”

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  28. krazykiwi (9,189 comments) says:

    Labour’s unfunded policy to remove GST from fresh fruit and vegetables would deliver only $1 a week for the average Kiwi

    And that $1 would disappear in pretty quickly once the Fruit and Vegetable Commission, Food Taxation Commission, GST Equitability Panel, GST Review Authority and Healthy Eating for the Aged Review Panel sprung into life.

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  29. jaba (2,089 comments) says:

    yeh I watched him on Q&A I2 and it was so funny watching him trying to be cool calm and in charge BUT, the part about the pamphlet let him down big time. He looked as guilty as the day is long re the claim he knew nothing about it. He bloody well should have known all about it.

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  30. pollywog (1,153 comments) says:

    Distinguishing between fresh and frozen vegetables is just the start of the stupidities that this policy would lead to.

    Surely you’re not so stupid as to need a hand telling the difference ?

    The point is, English is a liar and a cheat so i doubt if he even knows what the real savings are and he certainly doesn’t know the health benefits of changing a mindset that would see NZers buying more fresh fruit and veg without GST.

    It’s more symbolic and a matter of principle that NZers would buy them just so’s the gov’t wouldn’t be getting their ‘extra 1$ a week’ that English could scam out of us by charging us 500$ a week rent to live in his own house for 15 years.

    And i’d fund the GST saving on fresh fruit and veg by, as we did with tobacco, taxing the shit out of fizzy drinks, which are proven as a leading cause of obesity and a total gouge in the fast food industry.

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  31. Roflcopter (424 comments) says:

    HarryGlicken, oops, I mean Mr Cunliffe…. settle down mate.

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  32. krazykiwi (9,189 comments) says:

    pollywog is right on cue with some wilted ad hominems and plump, fresh threats to tax the shit out of stuff. Classy!

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  33. flipper (3,550 comments) says:

    So…..

    What about grapes????? They will end in my stomach, but by different methods.

    Take a serious look at the input/output problems
    Dumb, Goff

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  34. JiveKitty (869 comments) says:

    Let’s assume an actual benefit of $1 per week per head of population for such a policy then. Let’s assume a 52 week year. As well as that, let’s assume a population of 4380508 which is the figure I got here: http://www.stats.govt.nz/tools_and_services/tools/population_clock.aspx. Multiply them together and you get about $230 million supposed benefit. Policy cost is $250 million. Bad policy even ignoring unintended effects of such a policy.

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  35. pollywog (1,153 comments) says:

    Classy!

    chur cuz

    some stuff needs the shit taxed out of it for the greater good of the most people…

    …tobacco, fizzy drinks and rich pricks spring foremost to mind :)

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  36. bhudson (4,734 comments) says:

    Kimble @ 4:38

    Absolute classic.

    Doubly or even tripley good that the money you take from your fruit & vege saving and reinvest in your tobacco will contribute to the tobacco tax which will fund your fruit & veges, which will fund more tobacco, swhich will fund more fruit & veges, which will fund….

    The tragic thing is that Labour actually believe that is possible.

    They think they can make something out of nothing – when all they are really capable of is making nothing out of anything

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  37. wreck1080 (3,730 comments) says:

    It depends. It may or may not be $1 a week depending on the scenarios you select. Bill English seems to think there is only a worst case scenario.

    If a political party recommends a tax decrease they should be made to detail how they would account for the drop in tax revenue. eg, through borrowing, tax increases in other areas, or , decreased spending in general.

    We know Labour will increase the top rate to 39% again, so I guess that is how they will fund this.

    Anyone who uses the argument that if aussie can do it then so can we. I say let the Aussies have their complex tax regime. We don’t want it.

    Keep compliance costs down.

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  38. jaba (2,089 comments) says:

    are you sure they said this .. nothing on redablurt about it or maybe they are scared some of you will point out what a stupid idea it is on their own blogsite

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  39. Radman (130 comments) says:

    Am I wrong in my analysis of this.

    The idea is that if it’s cheaper, people will eat more of it. If people eat more of it demand increases. If demand increases the price goes up. If the price goes up, it becomes less affordable to the poor. If it becomes less affordable the poor will eat less fresh fruit and vegetables.

    Do I have this right? Or am I just stupid like Cunliffe?

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  40. reid (15,939 comments) says:

    “…point out what a stupid idea it is on their own blogsite…”

    Yes I can’t wait to post this 2008 statement when they do:

    Dr Cullen also rejected calls for removing GST on food… saying it would make the tax system inefficient and any gains would be quickly wiped out.

    Perhaps they’ll have to put every single KB commenter into moderation…

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  41. krazykiwi (9,189 comments) says:

    @reid – Just checked Redablert. The GST story is up

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  42. bhudson (4,734 comments) says:

    Radman.

    Nope – In order to be stupid like Cunliffe you would have to think that the best way to fund this would be to encourage people to smoke so that you could use the additional tobacco tax take to replace the cost of the removal of the GST.

    It takes a certain type of Labour intellectual to truly perceive the logic in that plan

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  43. jaba (2,089 comments) says:

    you guys don’t muck around .. 2 of 4 already

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  44. bchapman (649 comments) says:

    Sorry I missed the outrage with property, rentals and financial services being GST-exclusive. How inefficient and costly is that?

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  45. salt (123 comments) says:

    The “too complex” argument doesn’t hold up too well to be honest – unprocessed fruit and veges aren’t that hard to sort out from the processed version. But the policy is, unsuprisingly for an early election bribe, stupid.

    The real problem with the policy is that it doesn’t actually help the people it’s intended to help – that is, the people who currently can’t afford to buy fresh fruit and veg*. It doesn’t include tinned fruit and frozen veg. These are, as any former student/otherwise poor person will know, BY FAR the cheapest way to get fruit and veg into you – especially in winter, or if you don’t happen to live near a really big urban supermarket. So the people who actually can’t afford pumpkin and beans and potatoes and broccoli at the moment, won’t benefit.

    I, on the other hand, will – as a middle-income earner who eats a lot of fresh fruit and veg, including the flash stuff like fennel, and eggplant, and strawberries in september ($6 a punnet at new world… hardly subsistence fare. but sooo goood,)

    “although as an avid vege eater who spends (compared to the oft-reported average) sweet f”ck all and still gets really good food, I question the contention that even people on benefits really can’t afford to buy pumpkin and beans rather than crappy processed stuff. It’s a matter of a) acquired tastes and b) knowing what to do with stuff.

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  46. jaba (2,089 comments) says:

    Labour, the Greens and unions have a deep distrust of “our” supermarkets with things like wages and yes, prices and yet, they have faith that they will reduce all fresh fruits and vegies and keep the margin GST free forever .. TUI

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  47. Yvette (2,689 comments) says:

    If Labour’s proposed change to GST – to remove GST from fresh produce – will cost $ 250m, that is 250m divided by a population of 4.380,508 [Jivekitty] is $ 57.07 for every person or
    a saving of $1.09 a week or 15 and a half cents a day.

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  48. Radman (130 comments) says:

    Can’t have 15cents as there are no 5c pieces around now. Swedish rounding makes it 10c.

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  49. krazykiwi (9,189 comments) says:

    Labour is clutching at straws. There’s just no stacking up the sense in this policy idea.. connecting certain expensive/litigious tax exemption with very, very uncertain health outcomes.

    Labour are deeply condescending in assuming that NZers can’t make sensible decisions for themselves… and must be pushed and prodded to do what’s best for them.

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  50. Radman (130 comments) says:

    You just don’t care about fat poor people krazykiwi.

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  51. pollywog (1,153 comments) says:

    ^^^bump that up to 20 ya stingy c*nt !!!

    thing is, if you’re broke as and scratching round for bus fare or a loaf of bread that dollar saving comes in mighty handy

    so sure, poo poo it like it’s chickenfeed and pray the arse doesn’t drop out of your cushy middle class lifestyle !!!

    one of my favourite songs at the mo has a lyric ” You better keep your ghetto pass intact cos you never know when you’re gonna need to go back”

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  52. jaba (2,089 comments) says:

    Stewy Nash is now talking up how fat we are as a country and taking gst off fresh F&V will make us all lean again .. wow, what a visionary

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  53. krazykiwi (9,189 comments) says:

    thing is, if you’re broke as and scratching round for bus fare or a loaf of bread that dollar saving comes in mighty handy …

    … for another 6-pack, some more KFC or a lotto ticket.

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  54. pollywog (1,153 comments) says:

    it’s a start jaba…

    …and the answer from the blue corner is to make poor fat people so poor they can’t even afford to eat the shit food

    real subtle

    … for another 6-pack, some more KFC or a lotto ticket.

    you forgot the sky tv and broadband connection for pirated movies, porn and music

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  55. Radman (130 comments) says:

    Pollywog, why not make healthy food free then? Surely that would solve it.

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  56. pollywog (1,153 comments) says:

    No such thing as a free lunch Radman.

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  57. bhudson (4,734 comments) says:

    No Pollywog? The wealthy non-smoker gets a [GST] free lunch of fruit & veges, paid for by the poor bastard puffing on their B&H. Smart man that Cunliffe.

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  58. ben (2,396 comments) says:

    David, as you point out the real cost of this policy has nothing to do with $1 a week. It is the massive lobbying effort it will create by everyone who wants an exemption, and the massive legal fees it will produce as smart people spend man years arguing over whether fruit tarts qualify.

    Phil Goff was on my plane this morning, I wanted to wipe that smug grin off his face more than anything.

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  59. Minnie (96 comments) says:

    If fresh fruit and veges cost 15% less – so the argument seems to go – not only will you save about $5 per week, you will spend more on fruit and veges (presumably using that $5), and somehow get skinnier on all the extra potatoes and bananas. Hmmm. Whose bright idea was this?

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  60. Fot (252 comments) says:

    “Labour, the Greens and unions have a deep distrust of “our” supermarkets ”

    Yep, these are the same idiots who think that dropping GST from “healthy” foods is going to make the world of difference for the morons who feed their kids junk.

    These are also the same idiots who want to force supermarkets to pay more than $15.00 an hour to their employees, even the worlds dumbest lefty will be able to work out that dropping GST from “healthy food” is going to be wiped out by a raise in the minimum wage.

    Of course the thing that should scare us most is the state deciding what is healthy food, can you imagine the Greens having any say in what is healthy?, these are the same people who are happy for our kids to take drugs for goodness sake.

    Let’s be honest here, taking GST off “healthy” foods is not going to make an ounce of difference, the morons are still going to feed their kids (the next generation of morons) on shit food, one can only hope that at some stage these idiots stop breeding and do us all a favour.

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  61. Monty (962 comments) says:

    goff sure is a dumb fuck. his pathetic polling is sending Labour into a blind panic.

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  62. Steve Wrathall (241 comments) says:

    Flashback to 1987: A floundering opposition desperate to gain traction against a popular 1st-term government, pledges to remove GST from various items. They lose and quietly drop this dopey policy.
    Let’s hope history is repeating itself.

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  63. reid (15,939 comments) says:

    Labour, the Greens and unions have a deep distrust of “our” supermarkets with things like wages and yes, prices and yet, they have faith that they will reduce all fresh fruits and vegies and keep the margin GST free forever .. TUI

    No, Liarbore’s just got into bed with Progressive and Foodstuffs, big-time. Talk about corporate welfare. Maybe this is how they plan to fill their coffers next election.

    You see, Stuart’s just explained on RedAlert they intend to zero-rate not exempt it, and that they intend to apply that only at the retailer end.

    This means, that Progressive and Foodstuffs can CLAIM GST on all their input costs that go into putting that orange into your shopping bag, and DON’T HAVE TO PAY the taxman. So they get a double-bonus.

    Isn’t that nice of Labour, to do that, for them.

    However the 50% of the retail market that isn’t Progressive or Foodstuffs and who don’t have computer systems that tracks it all, now get to estimate the amount of sales that they earn an extra 15% on, and how hard is that going to be, for the IRD to effectively police?

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  64. Pete George (22,804 comments) says:

    There’s a good chance of that Steve. Not much chance of this getting any traction in the next four years anyway. And even if Labour makes the cut in 2014 they will probably still need enough support from other parties.

    I’d wondered about that reid, the lobby problem in large doses. And far more space for avoidance to be fiddled. It would be a disaster.

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  65. OliverI (125 comments) says:

    Wow so, never seen Red Alert so on fire before – ignited by their own members!

    http://blog.labour.org.nz/index.php/2010/09/27/gst-off-fresh-fruit-and-veg/

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  66. Grizz (500 comments) says:

    Even if apples, bananas, oranges and kiwifruit were 15% cheaper people will still buy a bag of potato chips. Even if a huge coleslaw for the whole family costs 2 or 3 dollars to make, people will still spend 5 bucks on fried chips. A lot of healthy eating is about lifestyle choices. Even with this policy, the population will continue to get fat. It is nothing more than a hug a polar bear policy.

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  67. Put it away (2,888 comments) says:

    This is so lame I can’t even bother coming up with a comment.

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