Monday, September 27, 2010

Labour's GST policy

Today Phil Goff committed to axing GST on fresh fruit and vegetables if elected. Good. While originally against this idea, I've changed my mind after seeing the evidence. According to research from Otago University's public health department, removing GST from fresh fruit and vegetables increased consumption by 11%. For a country facing an obesity epidemic and an explosion of lifestyle diseases caused by the modern, sugar-rich diet, that seems like a worthwhile goal.

Critics will say the shift is complex and unworkable. Bullshit. Labour has a solid definition of what counts ("unprocessed" and "fruit or vegetable" - no space for quibbling over salad rolls or tinned beans there), and they've committed to providing the necessary support through IRD to make it painless and risk-free for business. The Australians can manage this. Are critics really saying we're stupider than them?

Which really only leaves cost. This policy will cost $250 million a year. Labour says that will be "repaid many times over" from health savings, but that remains to be seen (those savings will also be long-term rather than short-term). Its a hefty cost, but not one that will break the bank, and whether we want to effectively spend money this way is simply a question of priorities. As Goff asks:

If it’s appropriate to put up the price of cigarettes by $200 million a year in tax because you want to discourage smoking, why wouldn’t you spend the same amount to reduce the price of healthy fruit and vegetables to encourage people to eat what is good for them?
(Though I'd put this as "enable" rather than encourage, a removal of a price barrier to healthy eating).

Though if we're looking at ways of paying for it, here's an idea: restore the top tax rate of 39% on the 3% of income earners who earn more than $100,000 a year. This would net more than $550 million a year - more than enough to pay for this change. Plus, it would be a "tax switch" which benefits the poor rather than the rich. Seems like a good idea to me...