Official government advice was that only 30% of a GST exemption is passed on.

The Taxpayers’ Union revealed:

The Taxpayers’ Union can reveal that as part of the Tax Working Group appointed by Grant Robertson, and chaired by the late Michael Cullen, Treasury and IRD conducted analysis on what percentage of exempting GST from certain goods would actually be passed on to consumers.

The expert advice paper, concluded that while cuts to GST/VAT rates are passed on, exemption or multi-rate policies see just 30% of the tax relief passed on to shoppers.

The paper looked at the best available evidence and concluded: 

This research estimated that changes in the general VAT rate were on average fully passed through to consumers. However, changes in rates for specific goods and services were on average not fully passed through and had an estimated average pass through rate of approximately 30 percent.

So Treasury and IRD have said that the global evidence is that exemptions for specific goods and services only get passed on 30%.

So again this means Labour’s GST policy will see supermarkets benefit $1.54 billion and taxpayers benefit by less than $2 a week!

Comments (25)

Login to comment or vote

Add a Comment