'Schoolboy error': National claims $250m hole in Labour GST policy

There is a $250m hole in Labour's costings for its policy to remove GST from fruit and vegetables, National's finance spokeswoman Nicola Willis claims.

Calling it a "schoolboy error", Willis said the policy was "desperate politics from a tired government".

"In this desperate, last-ditch attempt to keep their jobs, Labour has mucked up the costings to the tune of around $250 million over the next two years."

Labour has said the policy would take effect in April 2024, but Willis said it was not reflected in the costing of the policy.

Labour had failed to account for the fiscal impact of removing the tax in this financial year, and had only "partially accounted" for its cost in the next financial year, Willis said.

"If the policy is introduced when promised, there will be a three-month hit to the books in the 2023/24 fiscal year, which ends in June. This is not accounted for in Labour's policy.

"Labour has also made a mistake in their costing for the 2024/25 fiscal year. The annual cost of the policy should be approximately $500 million as in later years, but Labour has only budgeted $365 million. This is not explained."

Willis said the cumulative size of that error would be about $250m over two years.

"This cannot be explained away as a timing issue related to when GST is paid to IRD by businesses. Treasury are explicit in their advice: GST revenue is accounted for 'when the purchase or sale of taxable goods and services occurs during the taxation period'."

Willis said it was an "amateurish mistake from a party who are trying to convince New Zealanders they can be trusted with the books.

"New Zealanders know it's time for a National government that can be trusted with the books, will reduce taxes and rebuild the economy."

In a statement Labour said: "The fact sheet was an earlier version that was only sent to media under embargo ahead of the announcement."

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"The materials that were publicly released at the time of the announcement were all correct.

"The correct cost of the GST policy has always been accounted for in our fiscals and was discussed in the media conference yesterday"