New Zealand’s Labour Government was warned earlier this year that removing GST from fruit and vegetables may not make them more affordable.
According to documents obtained under the Official Information Act for RNZ's series Off the Shelf: The Quiet Struggle to Stop us Eating Ourselves Sick, show health officials are investigating using the tax system to combat obesity. Ministry of Health documents say there is growing international evidence to support a tax on sugary drinks but that taking GST off food might not work in New Zealand.
The Labour Party says if re-elected it would exempt fruit and vegetables from GST at a cost of about $500 million a year. In April, ministers received advice, signed off by Deputy Director-General of Health Andrew Old, saying the high price of healthy food and the low price of junk food was contributing to a substantial risk to food security: "Vegetables and fruit and other core foods are unaffordable for many families while unhealthy foods and drinks are often heavily discounted."
"GST is based on a business’s total revenue not on the revenue associated with a particular product. So removing GST off vegetables and fruits would not result in a direct decrease in price."