Tuesday, 24 June 2008

Some commonly asked questions about the GST-off-food petition

RAM's "GST-off-food" petition has received upwards of 12,000 signatures at stalls like the one above. Some unions are also circulating the petition amongst their members.

Below are some commonly asked questions about removing GST from food for distribution in union and other social justice networks. Please feel free to copy and paste into an email to send to your own contacts. Or make up a quick leaflet to give to workmates and friends. Copies of RAM's "GST-off-food" petition is avaible from RAM's website.

Will sellers just lift their prices if GST is removed?

While sellers have a degree of flexibility in regard to managing their profit margins, they are not a law unto themselves. Customers ultimately dictate the course of a business, and New Zealand has a very competitive retail environment. If GST-off-food became a reality, Kiwis would not tolerate retailers or their suppliers not removing the 12.5% tax on their food items. There would be a mass exodus to sellers who didn't hike their prices, forcing the others to retreat. And remember, removing GST from food provides a PERMANENT benefit. Prices will always be cheaper by the amount of the GST than it would otherwise be if this 12.5% tax remained. In fact, as food prices rose over time in line with general inflationary trends, the amount of the benefit of removing GST would grow in value.

What about the loss in tax revenue?

The income tax cuts promised by Labour and National (which benefit the wealthy more than the rest) are significantly greater in terms of lost revenue than would be the removal of GST from food. And there is greatly increased GST revenue being generated as a result of record fuel prices and the rise in the cost of other goods and services. These rises will tend to offset the removal of GST from food. Anyway, New Zealand needs to move away from the GST flat tax, since it is so unfair to low-to-modest income Kiwis. The poorest person in the land pays exactly the same amount of GST on a litre of milk as the richest person. GST is the product of Rogernomics and the whole Business Roundtable agenda. We need to return to progressive tax systems where the rich pay a fairer share, possibly including a financial transactions tax which would capture greedy speculators in the tax net which they now escape under GST.

Should tax reform be part of a union's strategy?

Each union is working hard to improve the living conditions of its own members by campaigning for better collective agreements. And by campaigning for upwards adjustments to the politically legislated minimum wage, the union movement as a whole is trying to improve the well-being of every worker in the land. This combination of industrial and political campaigning has always been a feature of the NZ union movement, and long may it continue. The GST-off-food petition fits right into this union strategy. It is a political campaign supported by some unions and many union members that aims to improve the lives of low-to-modest income families struggling to pay the bills. Many are now simply unable to afford good food no matter how well they budget. This is a social justice issue. As one Maori woman worker said when signing the GST-off-food petition in Mangere: "Taxing food is like taxing the air we breathe." By supporting the GST-off-food petition, your union will earn the gratitude of all Kiwi battlers, which will pay off in terms of cross-solidarity in the future.

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