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Download AudioThe chief economist at pro-business think tank the New Zealand Initiative says taking GST off food is a bad idea.
National claims the move will be the centrepiece of Labour’s tax policy, and the Maori Party is also pushing the idea.
Eric Crampton says the 2018 taxation review found it would save the poorest 10 percent of households $14 to $15 a week – and for the same overall cost the Government could give every household in the country $28 a week.
He says making only some foods non-taxable, as was done in Australia, can lead to massive legal arguments such as what was bread and what was a cracker.
“Wherever you set that line, you’re going to have lawyers arguing the toss and accountants arguing the toss because everybody who is producing anything near that line will be trying to find ways it falls on the non-taxable side of the line so whatever you do it is going to create a mess,” he says.
Mr Crampton says breaking up the supermarket monopolies would be a better way to make groceries more affordable.
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