Labour's unfunded policy to remove GST from fresh fruit and vegetables would deliver only $1 a week for the average Kiwi – and much less for low income earners, Finance Minister Bill English says.Labour leader Phil Goff this morning confirmed h
Labour’s unfunded policy to remove GST from fresh fruit and vegetables would deliver only $1 a week for the average Kiwi – and much less for low income earners, Finance Minister Bill English says.
Labour leader Phil Goff this morning confirmed his party will remove GST from fresh fruit and vegetables if elected. The party has been running a campaign against the government's tax package, which takes effect on Friday and includes lifting GST from 12.5% to 15%.
In response, Mr English said the estimated $250 million cost of the new Labour policy would have to be paid for by extra borrowing, pushing up already fast-rising public debt.
“However it’s good to see Labour confirming they would leave GST at 15% on all other goods and services – they now realise that the vast majority of Kiwis will be better off from the government’s income tax-GST switch,” he said.
“But their politically desperate move to remove GST from fresh fruit and vegetables would needlessly complicate the tax system, increase compliance costs and create all sorts of perverse anomalies.
The $250 million annual cost of the move, divided among all New Zealanders, is worth, on average, just over $1 a week – less for low income earners and more for high income earners, he said.
“This puts the government’s tax switch, which will leave the average income earner $15 a week better off, into perspective,” Mr English said.
He noted that the Tax Working Group last year concluded that removing GST from food would make almost no difference to the distribution of tax across income levels, but would lose 20% of GST revenue, saying this would have to be made up by increasing other taxes.
