“Working out what counts as ‘processed’ fruit and vegetables for the purposes of GST exemptions is the boondoggle Grant Robertson warned us about – but the policy will be a boon for the bureaucrats who administer it and the lawyers who argue about it”, says ACT Leader David Seymour.
“Labour says the removal of GST from fruit and vegetables will only apply to non-processed fresh and frozen fruit and vegetables.
“But what will count as ‘processed’?
“Is removing kernels from a cob of corn processing?
“A fresh watermelon is sliced in half before sale. Is that processed? What about:
- A fresh watermelon sliced into bite-sized pieces?
- A fresh watermelon sliced into bite-sized pieces and mixed with bite-sized pieces of other fruit, but with no other ingredients?
- A fresh watermelon sliced into bite-sized pieces and mixed with bite-sized pieces of other fruit, but with no other ingredients and with a preservative so it stays fresh?
“Fresh and frozen capsicum will be GST-exempt. What about frozen capsicum that is sold sliced with the seeds removed. Is that processed? What if the frozen sliced capsicum is treated with a water glaze for better freezing? If that’s allowed, why not dressing on sliced cabbage and lettuce?
“Maybe Labour will distinguish between food presented for immediate consumption and food presented for grocery sale. In that case, compare a bag of washed carrots with a bag of washed baby carrots. The latter is packaged for eating as a snack. Which has GST?
“This policy will be a boon for the new bureaucrats who will be hired to work out what’s exempt and the lawyers who will lobby on behalf of producers.
“Meanwhile, as ACT has pointed out, consumers will only get less than a third of the benefit from the removal of GST from fruit and vegetables. The average New Zealander will be 57 cents a week better off.
“This policy will mean more complexity, more costs, and more bureaucracy for so little gain.
“All of this begs the question: why not just reduce wasteful government spending and cut income taxes?”