Labour’s desperation showing with leaked GST policy

Stuff reports:

National Party finance spokesperson Nicola Willis says she’s been leaked details of a Labour Party election tax policy to wipe GST from fresh fruit and vegetables.

But Prime Minister Chris Hipkins would not confirm nor deny the plans. GST is the 15% tax on goods and services, which is applied to most purchases in New Zealand.

“I’m not announcing our tax policy today,” he said on Thursday.

Nicola has good sources. She said for many months the Government had been looking at asset taxes, and she was proven right. I suspect she is dead right on this also.

On her way into question time on Thursday, Willis said she understood this was Labour’s tax policy, and that Finance Minister Grant Robertson had raised “serious concerns” about it.

“Despite the serious concerns having been raised, Chris Hipkins is no longer taking his finance minister seriously, and intends to announce this policy despite the serious concerns,” she said.

Our GST is the envy of most of the world as it is so simple. Keeping GST simple has been bipartisan policy for the last 30 years, but it looks like a desperate Hipkins is about to change that.

He ruled it out just three months ago incidentially:

Chris Hipkins has ruled out cutting GST from fresh food as New Zealand continues grappling with a cost of living crisis.

“Don’t expect to see anything in that space between now and the election.”

Hipkins’ comments were in response to questions from Bridge, who pointed to emails from AM viewers calling for the change.

The Māori Party has long-called for the change to remove GST from healthy food.

But despite those calls, Hipkins said it wasn’t something the Government was working on.

So Hipkins will have lied if it turns out this is something they are announcing.

But in May, before the Budget, Robertson said it would be too difficult to exempt food from GST.

“It’s a very, very challenging thing to administer,” he said, adding that he thought supermarkets would likely benefit more than consumers.

On this, Grant is right. But looks like he has been over-ruled.

The reasons this is a terrible idea are:

• Benefits supermarkets more than consumers
• Bastardises a clear Get system
• Leads to huge legal cases about hat qualifies for no GST. Are mushrooms a fruit or a vegetable? Technically neither as they are a fungi. But expect a huge boon for tax lawyers
• Generally any sort of removing GST on food benefits wealthier families more than poor ones
• Is very untargeted

The problem in NZ isn’t that we have GST on fruit and vegetables. It is that thanks to the Government we have had 18% inflation in the last three years.