A stupid and unaffordable policy

Stuff reports:

NZ First has announced a plan to remove from food, as part of several policies announced at its party conference.

This is incredibly stupid. Our GST is the envy of much of the world for its lack of exemptions. When you start doing exemptions, then you get gaming of the system. Does food include fast food? does it include pre-packaged meals? Does it include caviar? Does it include dining at top restaurants? Does it include drinks?

Peters said the policy was estimated to cost $3 billion a year, and would be funded by a clamp down on “tax evasion and the black economy”, which it estimated to cost $7 billion a year, and what Peters said was “drawing on the projected surplus of billions in the years ahead that result from running a sound economy”.

This is just intellectually dishonest. Basically this policy would blow the deficit out by $3 billion a year. There is no magic wand you can wave to locate and tax the black economy. The reality is that if you want a $3 billion a year tax cut, then you need a $3 billion a year spending cut.

 

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