The Australian Tax Office has updated their GST Food List.
The 86 page Food List details from ‘A’ to ‘Z’ the GST treatment of hundreds of food items. It is necessary because in Australia some foods are subject to GST and some are not.
For example, a fruit bun with a sweet filling is subject to GST but a fruit bun without a sweet filling is not.
Another interesting example is, a “bird’s nest nutritional supplement” is subject to GST but a “bird’s nest with sugar” is not. Yes, seriously.
The latest update clarifies the treatment of a host of products like pizza rolls, baked puddings, various indian foods, combat rations, dukkah and hampers, to name a few.
Check out the complete list at http://law.ato.gov.au/atolaw/view.htm?DocID=GII/GSTIIFL1/NAT/ATO/00001&PiT=99991231235958
It’s fascinating to see the work that’s created by tax exceptions.
Today’s presentation of a petition to Parliament for GST to be removed from food shows debate around this is only going to intensify leading up to the election.
It seems there’s support coming from Maori and Mana Parties and the Greens. With Labour’s stated policy to remove GST from fresh fruit and vegetables there is growing public sentiment which National may find hard to bat away should they be forced into tough post election negotiations to stay in Government.
Of course it’s not just low income households which would benefit. The biggest spenders would save the most. So it could be a real vote winner.
So the Labour Party has confirmed their policy to remove GST on “fresh fruit and vegetables”.
This is new ground for NZ’s GST policy and it will be interesting to watch the debate unfold as producers strive to get their products within the concessionary rate.
For my part, if there were tangible evidence the policy will benefit low-income households with consequential health benefits for the country then I think I could live with the added complexity it will undoubtedly bring.
However, two things concern me most.
1. Overseas experience suggests the retail price impact of a reduction in VAT tends to be short-lived. The UK reduced their VAT rate in November 2008 and while there was an immediate reduction in consumer prices the following month a UK Government report found by February 2009 prices had returned to their pre November 2008 levels. So who really benefits from a GST rate reduction? Some evidence at least suggests it won’t be consumers.
2. If we go down this path the precedent will be set for future governments to use GST rates as a lever to influence consumer behaviour. The ice will have been broken and lobby groups with the most influence will more easily persuade politicians of the merits in lower or even higher rates for different products. There’ll always be a public interest component which politicians could find hard to resist having succumbed this once.
KFC sold 16000 Double Down Burgers in the first three hours of its release in New Zealand.
The NZ Government collected $16,486 of GST in three hours from one product.
With similar sales levels the annual tax take from Double Downs could be more than $24,000,000. This would require 448,000 of us (just over 10%) buying one Double Down per week for a year.
Isn’t this called “living of the fat of the land”?
Clearly this country needs more products like Double Down Burgers!