Would Key scrap GST on food?

Written By: - Date published: 3:12 pm, May 5th, 2008 - 5 comments
Categories: election 2008, tax - Tags: , , , , , , ,

With hints that regional fuel tax could be put on the “go slow” list, along with parts of the emissions trading scheme, it seems like we shouldn’t take any policy on taxes for granted. For example, there’s a belief that National and Labour have consensus on not removing GST on food. A couple of comments from inside National circles got me thinking though. In search of an answer the most decisive thing I can find from Key is:

One of the big issues with GST on food for example, is while it’s conceptually a nice idea it is difficult to implement.

This is textbook Slippery John: non-committal enough to give the pollsters time to check the numbers with a nod to pragmatism.

Of course National’s pursued politically expedient policies before under the guidance of strategists like Crosby and Texter. Remember their desperate flip-flops on petrol tax as the election was drawing to a close in 2005?

Brash kicked it off with the flip: “We have got absolutely no plans to change it”, Key chimed in: “At this stage we are not planning a change”. Then came the Brash flop: “We see the modest, temporary reduction of excise I have announced today as the fair and sensible short-term path to take.”

It’s another flip-flop that’s got to be at least a little bit tempting for a party that has willingly traded on its principles in the past.

5 comments on “Would Key scrap GST on food? ”

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  1. darryl p 1
    5 May 2008 at 3:25 pm

    From an accounting point of view the complications that would come about by having GST on some things and not on others would be a nightmare. Better to just reduce the rate of GST across the board from 12.5% down to 8-10%.

  2. Matthew Pilott 2
    5 May 2008 at 4:58 pm

    Or try something else entirely – I wouldn’t trust retailers to pass on any reduction in GST. They simply pass on 50% of it, and say the rest is ‘administration costs’ and other bullshit. If all retailers do this it just becomes a government subsidy of big business.

    I wouldn’t expect anything usefull from Key or National though, they’re not interested in policy, innovation or anything they might have to commit to at this stage.

  3. Monty 3
    5 May 2008 at 5:06 pm

    I agree with matthew – people are used to paying a certain price – and I would see supermarkets and the like hiking prices somewhat because it would be an opportunity to gain extra profit – competition may see a small reduction – but I think for most people the gain would hardly be worth it. Better to have proper tax cuts like National will offer – and Cullen may (or may not) offer.

    And of course Don Brash points out some very good reasons to leave the GST alone.

    Who knows what Cullen will do in his desperation to retain power – he bought himself a train set. (maybe remove gst on travel to work as that is necessary expense of life as well)

  4. infused 4
    5 May 2008 at 5:07 pm

    Simple answer is no he wouldn’t.

  5. darryl p 5
    5 May 2008 at 6:21 pm

    There’s nothing to stop retailers charging whatever they want at the moment. They only thing that really keeps retail prices in check is the age old system of supply and demand.