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Source: ONE News -
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GST is set to rise to 15% in Thursday's budget and Labour is exploring the idea of exempting fruit and vegetables from the tax if elected.
But there are questions over how this would work.
Leader Phil Goff appeared with other party leaders on TVNZ's Q+A programme this morning and said research shows there is a "real health bonus" in excluding healthy foods from the GST.
"The School of Medicine has said very clearly in the last few week that if you do this people will consume more of those goods."
But exempting fresh fruit and vegetables would create problems,
according to Don Brash who chaired the original design panel on
GST.
"As soon as you start picking holes in it the compliance costs go
up very substantially," he says.
And picking which foods should be tax free could also be tricky.
"I'm intrigued that he is going to take it off fruit and vegetables and not meat for example and that starts to give you the problem of where this unravels," says Revenue Minister Peter Dunne.
But Goff says the complexities can be dealt with.
"Fresh fruit and vegetables - it is easily definable that's why we are doing it," he says, adding that anything processed will not be exempt.
However Goff was less definite when asked if Labour would proceed with the idea.
"We will look at those options, I think the most likely option is to ensure that the tax cuts that compensate will be fairer for middle and low income people," he said.
Most workers will get an income tax cut in the Budget and it is anticipated it will be paid for by raising GST from its current 12.5% to 15%. Labour's slogan has been "axe the tax", but when asked if the party would restore the general level back to 12.5% if elected in 2011, Goff said he didn't know "whether it will be financially viable".
