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Mexican sales falsehood continues to be repeated by anti-sugar lobby

This weekend TV3’s The Nation looked at excise taxes and specifically whether the sorts of taxes we impose on alcohol and tobacco should be extended to sugar, fats, or junk food.

Professor Nick Wilson from Otago University is quoted in support of imposing a sugar tax (among others) and tells Torben Akel that:

“A ten percent price increase, as in Mexico has produced, roughly, a ten percent reduction in sales.”


This isn’t the first time this claim has been made by New Zealand academics campaigning for a sugar tax. Back in July we published a report by Joshua Riddiford which not only looked into the merits of a sugar tax, but showed up the falsity of the ‘it’s working in Mexico’ claims.

Our report published Nielsen sales data (showing actual volume sales) for the first time publicly. It showed actual industry sales before and after the implementation of the Mexican tax. The Nielsen data shows that Mexican sales of sugar sweetened beverages have barely moved after the sugar tax.

Sales are sales – surely the numbers don’t lie

Repetition of the same sound bite doesn’t make it true. The favoured study used by public health academics (and other campaigners) was funded by a pro-sugar tax campaign group and is based on surveying Mexican consumers on their expressed preferences. The real sales data shows that despite what people tell researchers, the Mexican sugar tax caused a drop of consumption of only 0.2% which as since bounced back.

wilson.jpgAcademics are supposed to promote informed public debate. Instead, there appears to be continuation of an activist political campaign based on misinformation and bias. Choosing to ignore the sales data which is clear suggests either failure to stay up to date with evidence, or deliberate misrepresentation. 

Expressed preferences are often skewed. For example, when you ask people how often they use local libraries, they inflate reality. Here, people have told researchers they are reducing their consumption of sugary drinks when the sales data shows that not to be the case. Sales figures don’t lie, but people do, and it’s misleading to rely on a survey study when gold standard Nielson sales data is available.

We all agree that obesity is a problem, but the evidence is that sugar taxes raise a heck of a lot for politicians while hurting the poor, but do very little to help those over-consuming. As a precaution, and to give Professor Wilson the benefit of the doubt, we'll be sending him a copy of our report on Monday.

Click here to access or read a summary of Fizzed out: Why a sugar tax won’t curb obesity.

Jim Rose: The low skilled won't be hired for living wage jobs

The Taxpayers' Union and the Wellington Chamber of Commerce are mulling legal action against the Wellington City Council's decision to restrict it choice of security contractors to those paying a 'living wage'. We've told the the National Business Review that if the Chamber don't, we will almost certainly hold the Council (and Councillors) to account for deliberately ignoring its own legal advice and plowing forward with a measure that imposes more costs on ratepayers, including those earning minimum wage, for absolutely no gain. Click here to read the media coverage.

Our Research Fellow, Jim Rose, has written the following analysis of the decision from an economic perspective. 

Chairman's Address and Report to the 2015 AGM

When we launched the NZTU back in November 2013, I remarked, echoing Churchill, that this was not the beginning of the end, or even the end of the beginning.

It was in fact the beginning of the beginning. Now two years ago, we can see how far we have come, but we can also see how much further we have to go.

The distance we have travelled is to turn an idea, more correctly an ambition that burned hot and hard in the minds of Jordan Williams and David Farrar, into something real and tangible. The organisation exists and is active and achieving. It has full time and part time staff, volunteers and interns, members and supporters.

David and Jordan wanted an organisation that would advocate for taxpayers, the ultimate and really the only source of government revenue.

They wanted an organisation that would cry, hoi …that’s not right or not fair on those who were wasting money on their own vanity and comfort, on projects that didn’t achieve what they set out to achieve, and on the never ending claims made on the taxpayers’ wallet for ever more spending. And for taxpayers include ratepayers and others who have to pay because they have no choice.

I think we have delivered that. We have exposed stuff, drawn attention to rorts and snouts in the trough, to excessive spending, and to extravagance wherever we have found it. The $6 million plus house for our consul general in Hawaii is only the latest example. Grooming lessons for Auckland Council staff, and a hair straightener for MBIE staff ($409.25) all cost money and reflect a culture that says it’s already to be profligate with someone else’s money. That someone else in this case is the long suffering taxpayer or ratepayer, and we have had enough.

It’s not all point and shout. We have tried to develop a reasoned critique around spending. We have argued from a principled and a factual basis that the billion dollars worth of corporate welfare this government dishes out each year doesn’t produce good results, is unnecessary, plays favourites and most seriously of all, the very practice of grants and subsidies to so called emerging businesses says that bureaucrats and ministers are better at picking winners than investors and entrepreneurs in the marketplace are. That’s just nonsense.

And there is more to come. One publication now in its development stages is an alternative economic strategy. We’ve called it Plan B. It sets out what we and a bunch of very reputable economists and business leaders think the government should now do to improve our economy. It’s a ready-made agenda for reform, which we intend to use to argue for positive changes to improve growth and prosperity.

We will also be making specific points about the sale of some government assets, actually they are government liabilities for which there is no business case for the taxpayer to own, and to continue dumping money into. And we will also be giving the government some advice about how to spend the budget surplus, now that it has turned up.  

Our view – unsurprisingly – is that hardworking New Zealanders ought to get most of the surplus given back to them in tax cuts. It can hardly be the case that governments know how to spend money better than ordinary people.

If there is a surplus it is because the government has taken too much from us. The answer is simple. Give it back. We will be saying why, and putting forward some ideas about how.

2016 looks bright for the Taxpayers Union. We have created Auckland’s largest political movement. The Auckland Ratepayers Alliance has over 14 thousand members, more than the Green Party and very close to the reported  membership of the Labour Party across the whole country.

And those people are going to be active in trying to unseat the gang of nine, those councillors who voted for a nine percent plus increase in rates for the average Auckland household.

They are going to feel the heat, and we will be backing the ARA to defeat as many of them as possible. Auckland needs sensible government that lives within its means, not continuing extravagance that raids the ratepayers’ pocket whenever the council’s coffers run low.

Always, but always, we know that we depend on the support and generosity of our supporters and members. We are always grateful, but we are also almost always desperate as well. Donating to causes and charities is the ultimate act of discretionary spending, but without continuous support we will simply not survive and be able to do the work that so much needs to be done.

I urge you all not just to dip into your pockets once, but to sign up for an ongoing commitment, monthly, quarterly or whatever suits you best. We can then see a positive cash flow into the future, which not only gives us comfort to proceed with projects, it also tells us that we are doing the right things, the things our members want us to do. Of course if you can manage a more substantial donation once or twice year, that is even more welcome.

Many of the groups that we battle against can go to government agencies and get taxpayer funding to lobby the government for their causes. That path is closed to us, which means we rely on people like you. You have not let us down, and we want to continue to make you happy in what we do and in what we achieve.

Finally may I thank very much my fellow board members, David Farrar, and Gabrielle O’Brien and our executive director Jordan Williams and various other staff members, volunteers, contributors, all of whom have given freely of their time and talent. I applaud you along with our members and supporters for keeping the NZTU alive and well through another eventful year.


John Bishop
New Zealand Taxpayers’ Union

20 October 2015

WCC legal challenge

The Taxpayers’ Union is currently considering legal action against Wellington City Council following the council voting to extend the so-called living wage to private contractors.

Like others, our initial legal advice is that the Council is highly likely in breach of the Local Government Act which requires Council to provide services in the most efficient manner. If the property and business groups decide against seeking judicial review of the Council we are almost certain to do so.

Our main hesitation is that the Council may throw good money after bad to defend the decision. But that might be a necessary evil to act as a reminder to councils throughout the country that they are required to be prudent stewards of ratepayers’ money.

Choosing to pay someone more than is necessary for him or her to do the job does not alleviate poverty. Charging people on the minimum wage more money in rates so the Council can pay higher wages is expensive virtue signally with ratepayers picking up the bill. Why should those working for the minimum wage pay more in rates for councillors to feel good about themselves?

Our Chairman, John Bishop, was recently interviewed by Mark Sainsbury on RadioLive about our likely legal challenge. John explains our opposition to the move and why the Council should stay out of the affairs of a private company. Audio available here.

David Farrar has obtained a transcript of the Wellington City Council’s CEO advising Councillors against the move, which is available on Kiwiblog. 

$80,000 taxpayers dollars for meaningless waffle

images-2.jpegThe Government is giving $80,000 (labeled a "Community Development Scheme" grant) to the Methodist Mission for the following:

The key outcome for the project is the development of a greater sense of community within the inner city. The project’s goal is to harness this energy to empower residents and the broader community to self-identify and achieve their aspirations. 

Talk about an easy gig. For $80,0000 who wouldn't harness energy and be empowered to self-identify and achieve aspirations – whatever that means? It’s the sort of Government spending waffle that usually goes unnoticed, but adds up and needs to tackled.

Many of the grants under the Community Development Scheme are services the Ministry of Education or Health should be providing anyway. Instead of funding good quality core government services, these grants blur the line between community efforts and government funded services. It may even come at a cost to community involvement, fundraising and philanthropy.

One of the reasons New Zealand’s communities are poor is because they are over taxed. Only politicians could think that that ‘development’ means taxing more more so that they can play Santa Claus and give dollops of cash to groups offering these sorts of platitudes. If a community groups wants to tender for something a community needs good on them, but the Government should be funding specifics, not aspirations.

Below is a list of this year's grants (each for $80,000).

Taxing the ill

DHBs charging millions for patients to park

web_image.jpgOur new briefing paper on public hospital parking charges reveals that District Health Boards are raking in nearly $15 million per year in parking charges at New Zealand’s public hospitals.

The information has been compiled from Official Information Act requests shows that more than $44 million has been levied since the 2012/13 financial year. The Paper shows that of the twenty DHBs, seven (Northland, Hutt Valley, Mid-Central, Capital & Coast, Auckland, Waitemata and Waikato) charge patients for parking at one or more of their hospitals.

Taxpayers have already paid for the construction of the hospital and the car park. Why must they pay twice when they are unfortunate enough to have to make use of the facilities? Talk about kicking someone when they are down.

Parking taxes at hospitals punish those who are ill and may well be on benefits. The last thing that a patient should have to worry about if they are attending for treatment is whether there is going to be a penalty notice waiting for them when they return to their vehicle. Often patients won’t know how long their treatment will last and therefore how much to put in the meter.

While modest charges may make sense in large city hospitals where good public transport is available, we think for places like Northland, where patients often travel considerable distances, hospital parking fees are are a nasty revenue gathering tool which should be abolished.

When New Zealanders are ill or suffering from a family emergency, the last thing they should have to worry about is whether or not they have enough spare change for the DHB's car park.

View the paper below, or download here.

Guest post: GST on online purchases

Greg Harford, the General Manager of Public Affairs at Retail New Zealand has drafted the following on proposals to reduce the threshold for GST for imported goods purchased online.

Many people agree that tax is a necessary evil that we need to provide core Government services. Many people also think that, if we have taxes, they should be as low as possible, and enforced both fairly and consistently.

Retail NZ was interested to see that the Taxpayers’ Union is running a poll on whether the Government should reduce the threshold at which GST is collected on imported goods. At the moment, a loophole in the law means that if you buy $399 worth of books from your local bookshop, you pay GST, but if you buy them from a foreign website, GST is not paid. This means that those shopping in local stores pay more than their fair share of GST, while those shopping online from offshore don’t pay their share. It also means that the New Zealand Government is effectively applying a reverse tariff against New Zealand businesses, and that it’s harder for Kiwi firms to compete for Kiwi business.

Retailers have long argued that the Government should close this loophole. New Zealand (and Australia) are well out of line with international best practice on this, and it is time for change.

It has been suggested that the arguments against this are that collecting GST would be administratively burdensome, that the tax collected may be less than the cost of collection, and that consumers will be forced to wait longer for the delivery of products.

The administrative question is a bit of a red-herring. Retail NZ and Booksellers NZ have been lobbying for the GST registration of foreign companies selling to New Zealand – so GST would be collected by foreign websites in exactly the same way that it is collected by New Zealand-domiciled retailers. This would largely remove administrative cost (the cost would be no different to the costs imposed on domestic businesses), ensure that the tax collected is greater than the cost of collection, and ensure that most goods would flow freely across the border, without delay or inconvenience to consumers.

The big foreign etailers are all in a position to “switch on” sales tax collection for New Zealand (they do it for some other jurisdictions). If the major etailers registered for GST, this would mean that GST would be collected on the vast majority of items imported into New Zealand.

The current process may, however, be required for goods purchased from boutique companies that do not register for GST. However the volume of items processed in this way is expected to be very small. This would, we expect, lead to a substantial reduction in costs to Government overall, which would be good news for taxpayers.

No tax system is perfect. GST is not a new tax. It has long been a tax on the consumption of goods and services in New Zealand. Some people may wish to have an argument about whether GST is a fair or appropriate tax system for our country. But if we have such a tax, it should be levied universally, irrespective of where the transaction takes place.

I was slightly concerned to read in a Taxpayers’ Union email that foreign websites could be banned from trading in New Zealand. To my knowledge, this has never been mentioned in the debate either here or in Australia, and we would certainly not support such an approach. We are not against online shopping, but we are concerned about a tax that is unfairly applied and seriously disadvantages New Zealand businesses.

Our point in relation to the 'banning' of foreign websites is that it is the inevitable conclusion if a foreign domicile website (say one offering music downloads) simply refuses to apply NZ's tax law. We of course hope that it never happens!

First sugar taxes, now meat, dairy, and even bread


Within hours of our release of our latest report paper examining why sugar and other food taxes don't work, Auckland University has published a report calling for new food taxes which looks to be the most ridiculous yet.

Auckland University academics are calling for a 20% flat rate tax on bread; breakfast cereals; processed meat; fresh beef, lamb, hogget, and poultry; all take-away foods; butter; cakes; biscuits; cheese; cream; pies; pizza; sauces and condiments; milk; ice cream; yoghurt; and eggs.

The University’s press statement says that "Maori and low-income New Zealanders are most likely to benefit from these policies”. 

We are dumfounded that ivory tower academics could think that taxing staple foods will help the poor. We had to call Auckland University to check that this wasn’t a hoax. They even want to tax fresh milk, eggs, and meat.

Ramping up taxes on basic staples under an arrogant guise of helping the poor is surely a cruel joke. Pulling numbers from secret computer model and boldly claiming that it will be the amount of ‘lives saved’ is political advocacy, not academic research.

Given the mistruths and fundamental flaws the Taxpayers’ Union is beginning to uncover, Auckland University should be reining in its public health unit before this whole issue becomes an embarrassment for the University. For example, our paper shows that the claims being made by Auckland University's activist academics of a 12 per cent drop in Mexican soda sales since that country implemented a soda tax are false. Actual sales figures, collated by Neilsen and published in our report show that Mexico’s tax has had virtually no impact on the volume of sales. 

The Taxpayers’ Union report, Fizzed Out: Why a sugar tax won’t curb obesity, is available here.


Update: Food and Grocery Council have just issued this media release largely agreeing with us


Press Release: 9 July 2015 

Auckland University wants to tax bread, cereal, meat, eggs and milk 

A call by Auckland University academics to tax New Zealand families’ staple foods such as bread, milk, eggs and meat is lunacy, says NZ Food and Grocery Council Chief Executive Katherine Rich.

“Over the past two years, the Universities of Otago and Auckland have called for new food taxes on salt, fizzy, sugar generally, fat and saturated fat.

“But what’s new in today’s announcement, and buried in the small print, is a 20% extra tax on the staple foods that New Zealand families rely on – bread, breakfast cereals, eggs, cheese, milk, beef and lamb.  These foods are an important part of a healthy and balanced diet for most New Zealanders.  

“The academics’ computer modelling might look sophisticated and compelling in theory, but it’s a computer model. The number of lives they claim will be saved by introducing such a tax is just a prediction.

“What is not a prediction is that slapping taxes on will not change people’s eating or drinking habits unless those taxes are very high.  This has been proven around the world.

“What would be very real would be higher food costs for all New Zealand families due to the relatively inelastic demand for important staple foods. 

“Based on sales of these foods over the past 12 months, at the very minimum these taxes would add $1 billion a year to families’ grocery bills. To give some specific examples, these taxes would generate $40 million from taxing eggs, $92 million from milk, $56 million from breakfast cereals, $90 million from bread, $74 million from cheese, $40 million from butter and margarine, and $70 million from sausages and other packed meats.   And that’s just supermarket sales. Kiwis buy their groceries in lots of other places, too.” 

Mrs Rich said suggesting a tax on milk, cheese, butter and yogurt was ironic given that for the past few weeks New Zealanders have been discussing the price of dairy foods.  

“There is also a stark truth behind these tax ideas. If these taxes were levied at a high enough rate and they did actually change behaviour, they would do so only by making a huge part of the weekly grocery shop unaffordable for many New Zealand families, particularly our poorest.

“The researchers, surprisingly, said in the media today that these taxes would help people on low incomes. I would like to see them try to explain to some of New Zealand’s poorest families why they should pay more for their bread, eggs, cheese, mince and milk. I suspect some of their academic theories promoting hiked grocery prices for everyday food necessities will not be well received by the public.”      

New report on why a sugar tax won't curb obesity

The Taxpayers’ Union is today launching a report which corrects the recent claims of New Zealand campaigners about the effectiveness of sugar taxes in curbing obesity.

The report contains Nielsen sales data, which is being publicly released for the first time in New Zealand. The data shows that Mexican sales of sugar sweetened beverages have not moved, despite the introduction of a sugar tax. While Auckland University’s public health activists are choosing to use interview data which supports their campaign, the real sales data does not lie.

Fizzed out: Why a sugar tax won’t curb obesity, sets the record straight, and examines honestly whether taxes on food and drink, such as that introduced in Mexico, are likely to reduce consumption and affect obesity rates. 

Key findings:

  • Fizzed-out.jpgOnly 1.6 per cent of New Zealanders' total energy intake comes from the added sugar content of sugar sweetened non-alcoholic beverages
  • New Zealanders' consumption of sugar and sugar sweetened beverages is trending downward
  • New Zealanders are still getting fatter despite consuming less calories, suggesting that we’re not burning as many calories
  • Sugar taxes hurt the poor and do not result in the decreased consumption tax-supporters claim
  • Similar taxes overseas have not worked - Mexico’s tax on soda resulted in no decrease in consumption, despite recent claims to the contrary by New Zealand campaigners
The report's author, Joshua Riddiford, sums up the politics of food and drink taxes in his executive summary:

Proposing a 20 per cent tax on sugar, as some groups have suggested, appears to be more about value judgements on sugar than actually helping New Zealanders towards better health outcomes.

Christopher Snowdon of Britain’s Institute of Economic Affairs, has written a foreword to the report which concludes:

A sugar tax is attractive to politicians because it allows them to engage in mass pick-pocketing with a sense of moral superiority.

It is not good enough to say that anything is worth a try in the campaign against obesity. A policy that is known to incur significant costs without reaping any measurable rewards is a policy that should be rejected.

The report which can be viewed below or downloaded as a pdf. Hard copies are also available on request.

MBIE revoke offer to meet

The head of the government department that spent $140,474 on a TV screen, $67,339 on a sign and $5,480 on an arts consultant for its new Wellington offices, has retracted an offer made to the Taxpayers’ Union to meet about the Ministry’s spending.

After we expressed public concerns last week about the Ministry's spending, MBIE officials told us that the CEO, David Smol, would be willing to meet and discuss the wasteful spending within the Ministry. Now the media heat has died down, they refuse to talk.

We wanted to have a serious meeting away from the media to constructively engage on how the Ministry is spending taxpayers’ money. Instead of keeping their word, the Ministry is once again running from accountability.

Below is the video of Porky presenting a Taxpayers' Union Certificate of Achievement in Government Waste to the Ministry's Head of Communications. On the video he can clearly be heard saying that the CEO would meet with the Taxpayers' Union to discuss wasteful use of taxpayers’ money...

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