I think this is an excellent policy, and a long time coming. This is done overseas with good effect. While I don’t think it’s a magic bullet, it is definitely a step in the right direction.
It seems like a good idea. But it is a drop in the ocean. There were policies Labour could have been pursuing that would make some genuine difference, but they’ve ruled them out.
I’m not convinced. If implemented, you could never reverse it because you’re just losing votes. That’s a good reason why it’s a thing overseas - they used it to buy votes and you can’t remove it without losing votes. I also think our duopoly of supermarkets is one thing that separates us from most other western countries that have GST exemptions like this.
What I’ve seen the past few years is complaints about how when things like this happen, companies just absorb most of the savings as profit. With a duopoly of supermarkets, I can’t see why after a few months fruit and veggies won’t be back at normal prices, with the saving taken by the supermarket as profit.
Any thoughts on this angle?
With a duopoly of supermarkets, I can’t see why after a few months fruit and veggies won’t be back at normal prices, with the saving taken by the supermarket as profit.
Fresh fruit and veges is one area where there is real competition in the marketplace. Plenty of independent vege shops around (in the centres of population at least).
I can’t remember the last time I bought veges from a duopoly supermarket. Fresh and Save, Fruit World, Tai Ping, etc are all good options.
I also don’t normally but fruit and veggies from supermarkets. But the vast majority of people do, and that’s what makes the duopoly.
And remember that every dollar exempted from GST is a dollar of tax that needs to be raised another way (or a dollar of government service that needs to be cut).
I guess I don’t understand the intent. Are they trying to provide cost relief? Wouldn’t removing tax on income under X amount be easier to administer?
Are they trying to encourage healthier choices? Maybe a sugar tax could help (a supermarket is unlikely to absorb a tax, but they will absorb a profit).
Although if this is a way to justify creating a commission to monitor supermarket profits (which they said they will do), then I could get behind that.
I think we, as “lay-persons”, tend to only approach such issues from a single standpoint. I know I do, but I try to keep in mind that we do not see everything that goes into these decisions.
If I had to guess, I suspect these are the reasons behind this policy:
- Wanting to provide some cost relief, targeting food costs, but being unable to afford/unwilling politically to remove GST from all food.
- Wanting to encourage improved diets, which will save money in the long run on healthcare.
- Unwilling politically to ever raise tax, so adding a tax on sugary drinks is a non-starter.
- Having to pick a policy which isn’t just a handout, as it can give a win to the right.
- Having internal polls/data that this policy is popular amongst voters.
- Adjusting tax brackets could be spun by opposition as “raising taxes”.
I think Labour should be braver, but I understand they feel they are losing their chances of winning the election and thus are playing it safe.
You make a lot of good points.
I think Labour should be braver, but I understand they feel they are losing their chances of winning the election and thus are playing it safe.
This is likely a big part. If they were clearly losing we would probably see more impactful policies. Since they have had two terms and know that’s about when parties get voted out, yet they are still neck and neck with a right wing coalition, their best chance of winning is likely to make small adjustments that should be universally popular to gain a small amount in the polls, rather than going all out and risking a big drop in popularity.
I agree completely with your assessment.
My biggest complaint with NZ Politics is it seems people vote in the opposition just cause, rather than because they have good policies.
I’m sure there’s data from overseas about how well it works. My understanding is that it doesn’t result in base price increases in general (although can’t say I’ve looked at it closely). Yes, NZ could be different, but it also could not be. Even in a duopoly, there are competitive forces on prices. And yeah, we need to do something about the lack of competition in NZ in general.
You’re right that it’s a populist policy, but populism isn’t inherently bad… lots of good things would probably get overturned or taken away if the pressure of the next election didn’t stop politicians doing that.
Anyway, like I said earlier, I’m not that excited about this policy. I hope it helps reduce the cost of living for people who really need it, but it doesn’t seem like it’ll make a huge difference.
I’ve just posted a story from RNZ, where every expert they came across though it was a stupid idea.
Yeah, it’s a dumb idea for sure.
Government either need to privatize or bring a government shopping way into the fray. Consumers are getting fleeced on every shop. No point allowing supermarkets the ability to bully the farmers. No one can fight the supermarkets and they make mega profits.
Food shops are second biggest expediture after rent. There are better ways than taking her off. Really need to break up the monopoly and stop the supermarkets price fixing. There’s no reason to bring prices down as there isn’t competition.
So because it isn’t a perfect, one-stop, solution, we shouldn’t do anything at all?
Progress is made in small steps, not single giant strides.
It is far from perfect. It’s a labour manifesto. If they get in. I’ve heard plenty from them about fixing housing and yet they refused to change the tax brackets and refused to hold the such accountable.
There was stuff In stuff calculating that you’d save $18 a month. Pretty pathetic. Better than nothing but still very pathetic.
Again, it is a incremental change to add to other changes. It is not a magic bullet solution, and anyone who claims to have such a thing is lying. There is no reason to reject positive change just because it doesn’t do everything all at once.
I’m not lying. You are.
Solution is right there. Already laid out. Gst is not the solution. It’s really a nothing.
It doesn’t do anything at all. It’s a nothing. 20 bucks saving maybe if supermarkets don’t just raise price.
Government needs to actually do something. Something supermarkets can’t then directly charge consumers more for.
So no I wholeheartedly disagree entirely with you
You disagree that something is better than nothing? Because if you look carefully you will see that’s what I said. It’s not perfect, but it’s something. Small steps is how progress happens.
What am I lying about? I never claimed to have a magic bullet solution. I never claimed this would solve all problems.
I disagree that this is anything. No I think it’s barely fluff. It’s not even meh. Very far from Perfect. I’m pretty sure you’d be hard pressed to find anyone expecting the govt to do anything perfect. But this is just nuts.
No but you claimed nobody can come up with it. Plenty ideas out there. This isn’t it
It is a small change, but a positive change nonetheless. GST/VAT free produce has been trialed and found effective in many overseas countries, so it seems plain to me that it would be a good thing here.
Complex social issues are rarely fixable with a single policy, so at least Labour is trying to do something.
It’s a valid point, rather than taking on the supermarket duopoly or other bold measures, Labour is tinkering around the edges with a feel good policy that has been absolutely torn apart by experts.
Absolutely torn apart? GST free fruit and vegetables is the norm overseas. We’re the exception.
Sure there’s more they should have done. But I cannot see National or Act doing more.
Yeah, and they have court cases over whether a Jaffa cake is a cake or a biscuit.
Holy non sequitur batman!
Thank you for your valuable contribution to the conversation.
I felt your unrelated argument deserved an equally flippant reply.
They did the same in the UK many years ago. What’s your point?
Does this seem like a worthwhile use of taxpayer money?
Also, I don’t feel that was a particularly difficult point to understand, you end up spending big money on ridiculous edge cases.
So because of one edgecase that we could simply learn from, you want to throw out the whole idea?
This country has a real problem of “if the solution isn’t perfect don’t do anything at all”.
It’s a cake. Goes hard when stale. Unlike biscuits that go soft
That was the outcome of the case, yes.
Well no. That’s just the situation. That’s what makes a cake and a biscuit different.
Supermarkets don’t buy from the farmers directly.
Who do they buy from ?
Not sure what your point is exactly?
This has been discussed and debated for years, and the point we keep coming back to is that our GST scheme is so cost effective to administer precisely because it doesn’t have many exemptions.
There are far better, more cost effective ways to help people than this, adjusting tax brackets for inflation would be an ideal start. Funding food banks and lunches in schools would be another.
Introduce another tax bracket already!
Admittedly that’s tricky with most excess money not actually being earned but reinvested, maybe I’m advocating for a CGT (thanks for wholeheartedly trashing that idea, Jacinda!)
Doing the easy stuff so they can avoid the hard stuff really sums up Labour, doesn’t it?
Kinda, but I get why she avoided the issue entirely…
It sounds really be left to us so that we can argue it out amongst ourselves though (rather than being tied to a party). I’m being naiive here, but a bit like the medical marijuana (hopefully without the disinformation!).
Because she categorically said “never, not on my watch” it means it’s never going to come up (unless national has a stroke)
I mean, I would too, but then again I’m probably not prime minister material.
Commentators often make it sound as if it would be soooo overwhelmingly complicated
I agree. It’s really not that complicated. The whole edge case argument is totally exaggerated. Yes, let’s no do something that benefits people’s health because we might get sued is such a weak argument.
I’ve just posted a follow up article, there’s a lot of economists who think this is a bad idea.
