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Support for scrapping GST on healthy food

Published: 3:43PM Tuesday July 13, 2010 Source: ONE News

Support is growing among political parties for a Maori Party bill to remove GST from healthy food.

MP Rahui Katene drafted the member's bill, which has been drawn from the ballot that is used to decide which ones reach the debating chamber.

But although Labour has thrown its weight behind the bill, the government says it is too complicated and will not change Kiwis' eating habits.

The bill defines healthy food as fruit and vegetables, breads and cereals, milk and milk products excluding ice cream, cream products, condensed and flavoured milk, and lean meat, poultry, seafood, eggs, nuts, seeds and legumes.

But Revenue Minister Peter Dunne said there is a problem with that.

"What about bread, meat, poultry, fish, etc, and what about when you bring them together as a roll or sandwich? I think the real problem is with definition."

Healthy food is exempt from GST in Australia and Britain. But Dunne said those countries are examples of how complicated and costly this can be.

"The latest estimates that I've seen is (it costs) around $330 million on an annual basis. That's quite a sizable chunk." 

Labour says it will back the bill to its first reading though it only wants fruit and vegetables to be GST-free.

"I think you start with something that's easily defined and readily affordable. This would maybe cost two to three million dollars - that's affordable, particularly when obesity is costing the country over $500 million a year," Labour Party leader Phil Goff said.
But change is not very likely. Even if a majority of MPs vote to remove GST from healthy food, the government is considering using a rare power to stop that from happening.

Governments can veto opposition attempts to change the law if it is deemed too expensive.

Katene though is appealing for the bill to be at least put through its first reading so it can go to a select committee for public submissions.

Katene's Goods and Services Tax (Exemption of Healthy Food) Amendment Bill says food prices have risen more than 20% in the last three years while real incomes have risen only very slightly.

"While all consumers will benefit from the removal of goods and services tax from healthy food, those on lower incomes spend a greater proportion of their income on food and will receive a significant benefit as a result," it says.

"Research conducted both in New Zealand and overseas shows that the lowering of the price of healthy food ... leads to a significant increase in purchases of healthy food."

The issue is set to hit the debating chamber next week.