Monday, 5 April 2010

GST off healthy food: a broad campaign is the right thing to do

by Vaughan Gunson

Gordon Campbell, editor of the online magazine Werewolf, has written an invaluable article, Do the Right Thing, that completely knocks the stuffing out of all the arguments against taking GST off food.

Campbell’s well researched and timely article draws on the Australian experience – where there's no GST on basic food – to destroy the chimerical argument that it’s too hard to exempt food from GST. In Australia, current computer technology makes the exemption process easy.

In December last year, the Australian Taxation Office released a computer package that makes it quite simple for a lot of businesses to manage the food exemptions. The same technology could be adapted for New Zealand. The supposed difficulty has been one of the main excuses used by defenders of across-the-board GST, including the leadership of both National and Labour. But there are options available which would overcome any major inconvenience for retailers.

Campbell also highlights the results of a research project released in March this year by the Wellington School of Medicine, which confirmed that price decisively determined people’s food choices at the supermarket. Despite education on healthy foods, when it came to loading up the trolley, people went for the cheaper options, even if they were less healthy. From the study, the conclusion of Professor Tony Blakely is that price intervention works in encouraging people to choose healthier food. The research gives support to Maori Party MP Rahui Katene’s private members' bill to remove GST from healthy food.

As Campbell correctly points out, what makes GST on food an immediate issue is the government’s plan to increase GST to 15% and lower income tax. That shift, Campbell says, “will leave more money in the pockets of the relatively well off, and place a heavier burden on workers on low incomes, and on beneficiaries. That’s because those on benefits and the working poor have less discretionary income, and spend a higher proportion of their income on basics, such as food.” The poor will be worse off from the proposed tax changes, while the rich will get the benefits.

And this is the crux of the debate, it’s not about degrees of difficultly or “tax anomalies”, it’s about where you stand on tax justice for grassroots people. As Campbell asks: “why not do something so easy, so readily manageable by business, so justifiable on grounds of social justice, and so likely to deliver practical health benefits to the community?”

The answer for the National government – and the Labour leadership also, who are refusing so far to budge – is that removing GST from food would undermine a central pillar of neo-liberalism. GST is a regressive tax that has strong support within corporate, banking and government circles.

Removing GST from food would be a decisive step towards shifting the tax burden off grassroots people. At the same time it would de-legitimise the tax in the eyes of many people.

We know the call to remove GST off food is popular. In 2008, a small group of activists from RAM-Residents Action Movement collected nearly 30,000 signatures in a matter of months. Opinion polls and everyday conversations point to continued opposition to our food being taxed.

With food prices rising dramatically, and many global experts predicting further sharp increases in 2010, the cost of food for grassroots people will be major issue, which will bubble into the media and become a political issue. We can expect any re-launch of the GST off food campaign to be met with widespread support.

Rahui Katene's private member's bill to remove GST from healthy food will have the best chance of getting the support it needs from MPs – particularly Labour MPs – if there's a high profile campaign outside of parliament. That campaign could include a number of organisations and groups working together.

In 2008, RAM's GST-off-food campaign received support from the Maori Party, Grey Power and individual trade unions. Today, a number of other groups outside of parliament, like the Alliance, Child Poverty Action, Socialist Aotearoa, Global Peace and Justice Auckland, the Workers Party, and the NZ Council of Trade Unions, have positions which are critical of GST. This common ground would suggest there’s potential for a broad coalition in support of removing GST from healthy food. A broad coalition, if achieved, would provide the necessary capacity to mount a serious campaign in support of Rahui Katene's private members' bill.

Campaigning for GST off healthy food would require any coalition to raise tax alternatives to address the prospective government revenue loss. A frontrunner would have to be a Financial Transaction Tax (FTT) or Robin Hood Tax, as it's been recently named by a popular campaign in Britain.

A Robin Hood Tax targets the banks and the mega-wealthy. Following the global financial implosion, and the role played by the banks and other financial speculators, the time is right to popularise a tax which hits the most hated global purveyors of greed and exploitation. There's already support among a number of grassroots organisations for a Financial Transaction Tax, many of the same ones that oppose GST. So the potential for cooperation exists.

Initiating a broad campaign to remove GST from healthy food would be an important step towards achieving tax justice for grassroots New Zealanders. In recent months there’s been significant cooperation around Unite’s $15ph minimum wage petition, which has been encouraging. A campaign to remove GST from healthy food would deliver similar tangible benefits to grassroots people and also mount a political challenge to neo-liberalism, especially if combined with advocacy of a Robin Hood Tax that targets the banks and other financial speculators. It’s time to do the right thing and join together in a broad campaign that could spark a wider grassroots political resurgence.

It’s interesting that in the comments to Gordon Campbell’s article, two people who support removing GST from food ask very similar questions. Duncan Graham asks: “[W]here’s the political will to push this proposal?... When are we going to get a party with the energy to really run with an issue, particularly one with such widespread benefits?”

And Liz asks: “When are we going to get a viable opposition party that will push for things like this, strongly and loudly?” Something else for us to think about.

Vaughan Gunson is the national chair of Socialist Worker-New Zealand and the campaign manager for Bad Banks. To contact Vaughan email svpl(at) or ph/txt 021-0415 082.

See also Hey, Labour MPs, why not support GST off food?


Anonymous said...

Who decides what 'healthy food' is?
Farmers? doctors? Listener columnists? vegetarians? vegans? proponents of the Atkins diet? the Pritikin diet? the newborn Big Mac fans over at Weight Watchers? Those who think butter, coffee, alcohol, salt, flour, sugar,and meat are toxic poisons?

The longer you look at the panorama of human opinion on food, the less agreement you will see.

Dietary choice is an individual and cultural matter.

Anonymous said...

"Today, a number of other groups outside of parliament, like the Alliance, Child Poverty Action, Socialist Aotearoa, Global Peace and Justice Auckland, the Workers Party, and the NZ Council of Trade Unions, have positions which are critical of GST. This common ground would suggest there’s potential for a broad coalition in support of removing GST from healthy food."

they also have positions which are critical of each other, an ongoing situation unlikely to be covered over by a sojourn to the healthfood shop.

Daphne said...

First anon: I agree, which is why we should have GST off all food and not beat around the bush with attempted social engineering.

Second anon: if we don't hang together we will most assuredly hang separately. Thankfully the pro-worker left in this country seems to be getting over the "Life of Brian" disease... slowly.

David said...

Anon 2 writes: "they also have positions which are critical of each other".

I don't think that's true at all. Their criticism of GST may range from opposing the rise to 15%, to GST off food, to scrapping GST altogether, but those differences don't mean they "are all critical of each other".

I think most will support GST off food once Rahui Katene's private member's bill is drawn.

Why wouldn't they?

Vaughan said...

Generally being an optimist I would like to think that all or most of the groups I listed (and others of course) who oppose GST as a regressive neo-liberal tax, could work together to support Rahui Katene's private members' bill. It's unlikely that that Rahui's bill will get passed unless there's a mass campaign in support of it that pressures MPs - particularly Labour ones - into supporting it. A mass campaign isn't possible without a lot of individuals and groups working together. There's actually a chance of winning GST off healthy food because of the popular hostility to our food being taxed, it strikes a nerve that the left can tap into. I'm not interested in paper condemnations of GST that don't get turned into something real. Now, grassroots people will look favourably on individuals and groups that mobilise around this demand, and they might just be interested in the other things we have to say. Like the promotion of a Financial Transaction Tax, but perhaps even wider political goals that begins to address the fear and uncertainty that a lot of people have today. Gaining the ear of masses of people would be good thing for broad left forces, and hence worth cooperating together. Otherwise nothing's going to change.

Regarding GST off "healthy food" or "all food", I certainly prefer all food, but that's not what Rahui and the Maori Party are putting forward, and they have valid reasons for the position they've taken. I would hope that the definition of healthy food is as broad as possible and excludes some of the obvious unhealthy foods, but that's something to debate and work on. If there's agreement in general principle then I think the left should be supportive of Rahui's bill and do everything we can to get it passed and see if we can strike a blow against GST.

Vaughan said...

From No Right Turn

Against GST on food

Before the last election, the minnow party RAM pushed the idea of removing GST from food. At the time, I (along with most of the left blogosphere) thought it wasn't such a good idea - "that the hassle, confusion and increased compliance costs will likely swallow any benefit", and that it missed the real problem, which was income adequacy (or rather, the lack of it).

Thanks to Gordon Campbell's piece in Werewolf today, I've changed my mind. Campbell looks at Australia's implementation of GST - which excludes food - and at evidence from New Zealand on the effects of removing GST from food. Both are pretty compelling. On the former, good work by the Australian Taxation Office made compliance costs negligible. They introduced a software package integrated with the Australian barcode system which assessed every item with a barcode for the exemption, backed by a legal guarantee that businesses relying on it would not face any penalties if those assessments turned out to be wrong. Result: the assessment cost gets paid once, by the ATO, rather than many times, by each business. Compliance costs are low, and everyone has certainty. Sounds good, neh?

On the second point, Campbell cites research by the Wellington School of Medicine on what happened when shoppers were effectively exempted from GST on food items. The result was a significant increase in both the amount and proportion of healthy food purchased. The study also investigated the effects of education, and found they were negligible (and that is for highly targeted and specific - i.e. expensive and intrusive - education at that). So the empirical evidence is that removing GST on food would produce significant health benefits (and because of the regressive nature of GST, produce them at the bottom, where they are most needed).

So, low compliance costs (if we manage the change right), and positive health benefits. Against that, we have the simplicity of the tax system i.e. the intellectual purity of some bean-counter's ideological schema. One of these things is worth more than the other, and it isn't religious economics. I'll take solid real-world benefits over pure thinking any day.

The rest of the world, including our closest neighbour, exempts food from consumption takes. They make it work. We can too. And we should.

Anonymous said...

" There's actually a chance of winning GST off healthy food because of the popular hostility to our food being taxed, it strikes a nerve that the left can tap into."

Popular hostility?

That might be a nice wave to ride but it is not coming in. People signed the petition, but the grand finale of the north island GST off food march garnered only a few dozen of the usual suspects when it arrived at parliament.

For some time "the left" has been poking about looking for nerves to tap into, but people are not rubber plants for little left groups to harvest.