Fruit and vege may lose GST – Goff

ON THE TRAIL: Labour leader Phil Goff delivers his pre-Budget speech at Trailways Hotel in Nelson.
COLIN SMITH/Nelson Mail
ON THE TRAIL: Labour leader Phil Goff delivers his pre-Budget speech at Trailways Hotel in Nelson.

Labour leader Phil Goff stopped short of saying Labour would take GST off fruit and vegetables, but says it is fully committed to investigating the move.

In a speech to Labour supporters and business representatives in Nelson yesterday, Mr Goff hinted at the "broad direction" of Labour Party policies ahead of National's mid-term Budget next Thursday.

Mr Goff gave strong indications at where Labour is headed, but also left the door open in areas for the party to change its mind.

Before yesterday's speech, Mr Goff indicated Labour was considering taking GST off some food items as National has signalled it intends to raise the tax from 12.5 per cent to 15 per cent next week raising $2 billion.

Mr Goff said yesterday new research from the Wellington School of Medicine showed taking the tax off fruit and vegetables, worth $200 million a year, had the effect of getting people to buy healthier foods.

However, he said Labour would need to be convinced that removing GST on those items would actually make them cheaper before exempting them. "We would need to be sure it didn't create more red tape than it is worth."

Mr Goff criticised raising GST to 15 per cent saying it would hit small businesses and hardworking New Zealanders and Kiwi families hardest.

He also warned that if GST went up the real price rise could be well over 2.5 per cent as many retailers would also take the chance to put up the prices of their goods.

However, he told media after his speech that while Labour was strongly opposed to the tax increasing it had not ruled out keeping the increase and if National implemented it Labour would then have to look at its options, he said.

"One option is to take that revenue and fairly compensate middle and low income people and not just reward the wealthy. I think that might be the most practical way of doing it, but we are keeping our options open."

He said National had promised to offset the rise in GST by providing tax cuts, but those only benefited the top earners.

"The highest income earners already got the lion's share from the last round of tax cuts."

Labour's tax package would be fairer than National's, he said.

This included possibly shifting the highest tax rate of 38 per cent from $70,000 to $100,000, but also rejigging the lower and middle income tax brackets to provide relief.

Mr Goff also flagged further investigation into a universal KiwiSaver programme.

He also said that Labour would require the Reserve Bank to pursue broader objectives than having the single policy goal of price stability.

Labour would also restore incentives for innovative companies to invest in research and development. He cited the collaboration between the Cawthron Institute, Wakatu Incorporation and Crop and Food Research in aquaculture as a good example of creativity.

The Nelson Mail