Media release from New Zealand Labour Party

Phil Goff today launched a campaign against National's GST increase to 15 per cent, announcing that Labour will remove GST from fresh fruit and vegetables.

Speaking at an event in Porirua Phil Goff said many families will be worse off after Prime Minister John Key broke his promise that he would not increase GST.

"Most families' tax cuts will be gobbled up straight away by increased GST, prices rises, and higher charges for services like ACC. The NZ Institute of Economic Research estimates around half of all households will end this year worse off than they were a year earlier as prices rise and wages stall.

"But the top few per cent of New Zealanders will benefit hugely from National's unfair tax switch. That's not right and Labour will fix that.

"Labour's scheme to zero rate fresh fruit and vegetables is the first of the policies we will announce over coming months to help families get ahead and to build a stronger economy.

"Removing GST from fresh fruit and vegetables will help people on low and middle incomes make up some of the ground they are losing under National.

"A typical family of two adults, an adolescent and a five-year-old spends at least $42 a week on fruit and vegetables. They will save about $6 a week, or $300-$400 a year.

"Kiwis need to be able to afford to make choices around the type of food they put in their supermarket shopping trolleys. Fresh fruit and vegetables can't become luxury items because of the increasing cost of living.

"The Economist magazine just last week had a front page graph showing New Zealand has the third highest rate of obesity in the world. We have to do something about it. It costs us $500 million a year, and the cost is rising when the health budget is already under pressure.

"Labour has studied new research by University of Auckland and Otago University, which shows people will buy more healthy food if there is a price incentive. A price incentive about the size of GST is more effective than anything else researchers tested to get people to buy and eat healthy foods

Phil Goff said Labour estimated loss of tax revenue at around $250m. "But given the cost to the health system of obesity-related diseases, the fiscal cost will be repaid many times over in savings to the health system. The tobacco excise increase raises about the same amount."

Phil Goff said the scheme's simplicity makes it attractive. "To qualify the goods have to be fruit or vegetables - and they have to be fresh - it's that's simple. John Key says it's complicated, but that's an excuse. He doesn't want to help hard-working families get ahead.

"Evidence from Australia is that it is a relatively straightforward process for retailers, with a small cost initially to implement. Many businesses already deal with zero-rated inputs such as rent, financial services, second hand goods and overseas travel," Phil Goff said.