Analysis: Political editor Jessica Mutch McKay says taking the tax off fresh food is policy that makes sense for Labour.
Politically, removing GST off fruit and veges makes sense. It's an easy sell and will make a difference when low to middle-income New Zealanders are at the supermarket.
However, several experts, the Tax Working Group and Finance Minister Grant Robertson aren't keen on the idea as it puts holes in our very simple goods and service tax.
But that doesn't stop it being a good political move.
National deputy leader Nicola Willis was looking pretty pleased last week as she revealed what she claimed is Labour's policy to do just that and ditch the tax. She even referred to Robertson in her bid to rubbish the idea, claiming he says supermarkets, not your average Kiwi, would be the big gainers.
1News' Dewi Preece gauges some of the pros and cons of axing GST on food. (Source: 1News)
National says lower income tax is a much better way to help low earners.
Something that's not in dispute is that many Kiwis are struggling. The cost of living is going to be a defining election issue. When Labour candidates are standing in town hall meetings and being asked how they're going to help people with their household budget they'll be able to say, "you'll pay less for fresh food".
Cutting GST would mean 15% would be taken off a portion of everyone's grocery bills — that's a tangible thing to hold up for voters. Food prices have risen dramatically, and for places that buy a lot of fruit and vegetables, like daycare centres, marae and food banks, this would make a difference.
Then there's always the hope it'll increase fresh fruit and vegetable consumption. Mashed potatoes instead of pasta, apples and banana in the lunchbox and some seasonal fruit for pudding. Even if it's a few per cent, that would be seen as a win.
Eric Crampton says you could "do a lot more good" by simply giving money to lower-income communities. (Source: Breakfast)
Australia has a complex system where most foods are exempt from the 10% tax. They do pay a goods and service tax for bakery items, lollies, ice cream and savoury snacks but the basic staples like meat, fruit and vegetables and milk don't pay anything extra. That system would really fit with Labour leader Chris Hipkins "bread and butter" campaign style.
It's a safe Labour policy and that's what the party needs to go back to if it's to halt its dive in support.
The definition of what is fresh fruit and veges is hard, the admin will be tricky but politically it's a simple, clean bright red Labour policy and that makes sense.
Labour are set to officially make the announcement in the next "few" weeks and I'm told it's not the only part of their tax policy. We'll find out on the doorstep and at the ballot box whether National's Willis was right to be delighted to announce the leak, or if it's something the public get right behind.
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