To remove GST, or not to remove GST…

… That is the question.Will removing GST off healthy foods in NZ be beneficial or is it just too difficult?

The importance of access to health food is becoming a popular topic in the media as of late. With the GST rising from 12% to 15% means buying healthy food for low income families will be harder than ever now. We also know that lack of access to heathy food access is related to obesity and New Zealand is the 3rd fattest in the world!

The Maori Party suggested exempting GST for healthy foods such as fresh fruit and vegetables, staple foods such as bread, pasta, cereals, eggs and lean meats. The Labour party has also agreed but plan to, if elected, remove GST on fresh fruit and vegetables only.

But there has been a lot of debate about this issue. Will making healthy food cheaper actually benefit New Zealand, health-wise and the cost to the country?. I have looked in to some of the raised questions to try to find out wether or not the benefits weigh out the costs.

Will it actually make a difference?.

While we wouldn’t fine out precisely how much of an affect it would have until we try it, the research shows that if prices dropped on healthy foods then people would be more likely eat more healthy foods. A study at the University of Otago showed that reducing the price of vegetables by 12.5 percent increased the amount of vegetables people bought by 11 percent. While this wouldn’t solve the world Obesity issue as such it will make a difference to low income families and reduce the risk of nutritional deficiencies. It would certainly improve the national diet.

How much will it save people?

Taking GST off fresh fruit and vegetables would definatly take the strain off some families that struggle to pay for food. With neccessary costs for housing, bills, petrol, doctors fees and more continually rising, many families have to lower the amount of money they can spend on food. And low income families have to spend around 30% of their income on food, not leaving room for many savings. Removing GST would reduce inequality with the savings they could make.Mr Goff from the Labour party commented that “Removing the GST on fresh fruit and vegetables would save the average family $6 a week, or $300-$400 a year”. Sound pretty good, but who has to pay for it?

How much will it cost/save the government?

It has been estimated that the cost to the government to remove the tax will cost around $250 million.Goff also remarked “The cost of making healthy basics cheaper will be nothing compared to what will have to be paid out to support people with associated diseases in years to come.”  The long term savings on our health care system along with healthier happier communities would be a more ideal outcome than . Also if needed it wuld be possible to increase GST on luxury items (like yachts that most of us cant afford anyway so wouldnt be a big deal) or even smoking to make up the difference.

Is the tax system too complicated to change it?

Many think the beauty of the New Zealand tax system is just too nice to mess with but that, to me, seems like a bit of a lazy excuse, obviously remove tax on some items but ot others would make it more complex but certainly not impossible. If it benefits our people then it would would be a small ask for big gains.

How do you define what is healthy food and what is not?

Some skeptics seem to be confused on how we would differentiate between the healthy food and the unhealthy. In reality it is resonably straightforward. Fresh fruit and vegetables mean thy are unprocessed. Which means the fruit and vegetable would look the same as when they were picked or dug up from the ground. So a Big Mac would not be considered a healthy food because it has small amounts of lettuce and gherkin in it. Just to clear that one up.

Are there any other ways?

If is decided that GST should not be removed then there needs to be some other support for low income families. There has been some research at Otago University of an electronic pre-paid card for low income families to spend on these healthy foods. But Gst removal would benefit both low and higher income families. Food banks are being used more and more but these are not a sustainable solution and rely too much on donations from the public. In America, they also have Food Stamps which low income families can apply for. these are kind of like cash but you can only buy food with the, kind of like the electronic card from Otago studies except there is no nutritional limitation, meaning they can buy unhealthy food with them too.

I believe that reducing the cost of basic healthy foods will help everyone in the long run and save us money too. But the people it will benefit most are the low income families who have less money but have to spend a larger portion of their money on food. These families deserve to be on an even playing field with everyone else in our country when it comes to basic health.

Sources:

http://en.wikipedia.org/wiki/Supplemental_Nutrition_Assistance_Program

http://www.nzdoctor.co.nz/un-doctored/2010/september-2010/09/national-health-organisations-galvanised-by-mp’s-failed-gst-bill.aspx

http://tvnz.co.nz/politics-news/labour-rallies-against-gst-healthy-foods-3650720

http://www.stuff.co.nz/national/politics/4171113/Labour-to-axe-GST-on-fruit-veges

http://www.kiwiblog.co.nz/2007/12/gst_on_fruit_and_veges.html

 

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