Good publicity for bad idea

One of the most difficult tasks for an opposition party leader is getting noticed so if media exposure is a measure, Phil Goff did well with his suggestion that Labour would exempt fresh fruit and vegetables from GST.

He’s been on the radio, TV and in the papers talking about it.

But it’s good publicity about a really bad idea.

Exempting fresh fruit and vegetables from GST would increase the complexity of our tax system and compliance costs and make only a tiny difference in the retail price of food.

I bought a bag of 17 carrots this morning. They cost $2.99 which is about 17 cents each. If GST goes up to 15% it would add about a cent to price of the bag and 1/17 of that to each carrot.

If there was no GST on vegetables each carrot would cost about three cents less.

That is too little a saving to justify the extra expense of complicating our GST system, especially as it would increase pressure for more exemptions which would mean more complexity and higher compliance costs.

If fresh vegetables are exempt why not frozen ones, which may retain more nutrients than ones which are eaten several days, possibly weeks from harvest?

Why imported grapes and avocado but not locally produced milk which is just as important as fruit in a balanced diet?

If people aren’t buying and eating enough fresh fruit and vegetables, GST isn’t the problem, it’s low incomes, poor education and poor choices.

4 Responses to Good publicity for bad idea

  1. Totally agree.


  2. pdm says:

    You didn’t really expect Philin Phil to come up with an idea that might be cost effective did you HP?


  3. JPY says:

    Doesn’t your argument depend on how many carrots/other vegetables you eat? If you were Roald Dahl’s Charlie (Charlie and the Chocolate Factory) then the unit price of cabbages would be significant given that your whole family survived on cabbage soup.


  4. homepaddock says:

    JPY – Vegetarians (by choice or necessity) would gain more than omnivores or carnivores if fresh fruit and vegetables were GST exempt. But the amount of vegetables you eat doesn’t affect the fact that increasing complexity and compliance costs is a bad idea.


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