Monday, 27 September 2010

Tax cuts will be wiped out by food price bubble

Speculation by big banks, hedge funds and other financial parasites is forcing up food prices.
Tax Justice media release
26 September 2010

“There’s concern worldwide that another global food crisis is upon us,” says Vaughan Gunson, Tax Justice campaign coordinator. “The price of food is set to go through the roof, like it did in 2008.”

New Zealand Institute of Economic Research chief economist Shamubeel Eaqub predicts food price inflation in New Zealand to hit 10 per cent by the end of the year, which will wipe out National’s meager tax cuts for low and middle income earners. (See Rising prices to offset October tax cuts)

In response to the food crisis the United Nation’s Food and Agriculture Organisation held an emergency meeting last week in Rome. Olivier De Schutter, the UN’s special rapporteur on food, says the high food prices can only be explained by the emergence of a “speculative bubble”. (See UN warned of major new food crisis at emergency meeting in Rome)

“The statements coming from the UN about the food price bubble are of extreme concern,” says Gunson. “The UN is pointing the finger at the banks, hedge funds and other speculators who are behind the soaring food commodity prices.”

“The last time food prices were caught up in a bubble there were food riots around the world,” says Gunson. “And the number of people suffering from malnutrition globally spiked from 800 million to one billion.” (See The Food Crisis and Food Security: Towards a New World Food Order?)

“We felt the pain here in 2008, too. And we’re still coping with high food prices,” says Gunson.

“That’s because food prices at the supermarket haven’t fallen back to their pre-bubble levels. It’s the nature of the market for supermarket chains and other food producers and distributors to want to hold prices high to maximise profits.”

“New Zealanders need urgent relief from food stress,” says Gunson. “Removing GST from food, as the Tax Justice campaign is advocating, would be a good start.”

“And then we need to do our bit to stamp out speculation, on food and everything else,” says Gunson.

“These global greedies are manipulating the world economy for their own ends, while the rest of us suffer the fallout.”

“Making profits from an activity that impoverishes others – or worse – is a crime against humanity,” says Gunson.

As well as pushing for the removal of GST from food, the Tax Justice campaign is calling for financial speculation to be taxed. Speculators operating in the New Zealand economy currently pay no tax on their wheeling and dealing.

“Compare speculators paying zero tax to people having to pay tax on food and you see that there’s a core injustice at the heart of New Zealand’s tax system,” says Gunson.

“The National government and the opposition Labour Party are either ignorant of the problem, or they’re happy for this shocking injustice to continue.”

The Tax Justice campaign is in the early stages of founding a nationwide network of supporters and activists. “We’re building up for a determined campaign,” says Gunson, “that will force the politicians to listen.”

Since the Tax Justice campaign was launched a few months ago 12,000 people have signed a petition calling for GST to be removed from food and financial speculation to be taxed. “Our experience is that wherever the Tax Justice petition is taken it’s proven very popular,” says Gunson.

On 1-2 October, Tax Justice supporters are going to be out in force around the country collecting signatures to protest the National government increasing GST to 15%.

For more information on the campaign go to

For comment, contact

Vaughan Gunson
Tax Justice campaign coordinator
021-0415 082

Victor Billot
Tax Justice media spokesperson
021-482 219

No comments: