Spearheaded by the Tax Justice Campaign, a petition was signed by 40,000 New Zealanders, in which campaigners claimed that the tax had resulted in the poor and middle-income segment subsidising the wealthiest.
Instead of the GST on food, the campaigners proposed a new tax called the Financial Transactions Tax (FTT) to be levied on all financial speculation in the country at a rate to make up from the shortfall from the removal of GST.
GST in New Zealand is applicable to all food products and unprocessed food sold to the consumer in bulk, said Carole Inkster, spokesperson for the New Zealand Food and Grocery Council.
“The purpose of the proposal appears to be two-fold. The first is to assist those on limited budgets to better feed their families after a recent increase in New Zealand’s GST from 12.5 to 15 per cent and continued increases in the price of food,” she said.
Purchasing patterns
The second purpose could be the research by the University of Auckland in conjunction with the Health Inequalities Research Programme that suggests that price incentives change the purchasing patterns of food shoppers, she said.
The proposal initially, according to Inkster, seems limited to fresh fruit and vegetables, but the impact on manufacturers would depend on the scope of ‘fresh fruit and vegetables’ and a full analysis might better identify impacts.
“It would depend on the scope of the exclusion from GST - whether fresh fruit and vegetables that are packaged e.g. pre bagged fresh produce, vacuum packed fresh produce, would be included and what packaged food might encompass,” she said.