In recent days we have heard how NZ First leader Winston Peters wants to take GST off some foods, but not others. While any reduction in the tax-burden should be welcomed, this picking and choosing of which items should include a sales tax causes unnecessary confusion for suppliers, retailers and consumers.
Take the humble burrito.
It’s a Mexican staple; a food that’s becoming increasingly popular in New Zealand. And in New York State there is significant debate (think tax lawyers and accountants) on the question of whether it counts as a sandwich for tax reasons.
When politicians pick and choose sale taxes willy-nilly there are often unforeseen circumstances. In New York this has meant that the eight percent “sandwich tax” has become applicable to burritos. It’s also led to numerous hours of government officials and tax experts debating the trivial point of just what constitutes a sandwich.
At a cost of at least $3bn, removing GST on items of Mr Peters’ choosing is a big-ticket policy. But as with New York sandwiches, there would be endless regulations, descriptions and exemptions.
If politicians want to truly reduce the tax burden facing New Zealanders, they should start by cutting sales or income taxes across the board. Playing politics with your pantry is an expensive exercise that leads to some truly bizarre outcomes.