Waatea News Column: Why Māori Party GST off food policy is so important for all Kiwis
The latest TVNZ Poll is further proof that the Māori Party will be the Queenmaker in the next Government.
With such an important role, the Māori Party must step up for all New Zealanders to avoid ACT and National using their new influence as a stick to beat them with.
At a time of 3 Waters, co-governance and He Puapua, the ability for the Right to use the Māori Party’s ascendancy as ammunition in the looming election requires a politically strategic response.
A Māori Party championing GST off all food is going to be their strongest play.
The Russian war in the Ukraine is damaging the global economy in ways we still aren’t feeling right now. If you think food inflation is steep right now, wait until the full impact of losing 12% of tradable calories, 30% of wheat, 30% of barley, 80% of sunflower oil, vast numbers of metals and a never stopping oil and gas price explosion is going to cause.
We don’t comprehend how bad things are going to get economically by December of this year, when desperate people are going hungry, the Māori Party’s GST off food will be far more attractive than the fear the Right will attempt to smear them with.
These are unique times and they will demand unique leadership.
First published on Waatea News.
Removing GST off food is the tax cut the rich hate?
Why?
Because the amount of calories a human being needs to survive is basically the same whether you are rich or poor.
Proportionally the rich spend a very tiny amount of their income on food. Proportionally, the less your income the more of your income goes on food.
The opposite is true for income tax cuts. Proportionally, the rich with bigger incomes, get more money back from a tax cut on income. The smaller your income, the less you get in an income tax cut.
The double whammy of an income tax cut for people on low incomes, is that the services that are funded by income taxes, like public healthcare and education do not have the money the need to provide a proper service. Under funded public hospitals and schools do not bother the rich, who can afford private schools and private health care.
The apologists for tax cuts for the rich and keeping tax on food, have lots of specious and fallacious arguments about why should look after the greedy and not the needy.
Here are some:
https://www.canterbury.ac.nz/news/2022/removing-gst-on-food-is-back-in-the-news-proving-some-bad-ideas-just-never-go-away.html
Unless the GST is removed from the whole supply chain, removing it only at the consumer level means the state has to fund the GST on the final transfer to the retailer.
If a cabbage is sold by the grower to the supermarket it has a GST content. The retailer is able to claim this GST back as each “handler” in the supply chain does. However the state cannot collect the final GST take if GST is removed at this final transaction.
In each step of his supply chain, GST is carried forward and at each transaction the difference is collected by the state. Without the final reseller GST collection the state misses out on the bulk of the tax collection. If the food reseller market is $2 billion in size, the state misses out on 15% of that.
What taxes would the state increase to make up the shortful, or better still which bean counter would be sent back to the tradable sector to become tax positive.
I agree. What a thought provoking article.
It is a dumb idea by a dumb party that contributes nothing to race relationship. If you want to save 15 percent on your fresh fruit and vegetables go to the veg shop and avoid the supermarkets . They only sell what is good for you so apart from saving money you are not going to be buying other items of so called convienience food that are full of salt and fat and are overpriced
The problem with proposed GST decreases are the assumption that vendors will lower prices accordingly rather than pocketing the extra margin. I don’t see greedy supermarkets dropping a $5 product’s price to $4.35. Prices will remain the same and there will be a huge hole in tax revenue which will reduce the amount of spending we can do supporting the poorest.
This happened in the UK in 2009 when they reduced VAT
IRD and other tax experts always complain a policy like this would be too complicated and cost to much to administer. What rubbish. In reality, GST is a regressive tax that punishes the poor and a truly bold policy would be to get rid of GST all together and pay for the loss of income by hiking the highest tax rates.
A wealth tax for everyone with assets worth over, say, $5m, payable once deceased would also help pay the difference and help all NZers benefit from the massive wealth gain by NZ’s richest since the start of the pandemic.