Hard News by Russell Brown

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Hard News: The GST Punt

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  • Russell Brown,

    A WHO review published this year doesn't produce clear conclusions on the use of fiscal policy to alter eating patterns, and notes that despite it being a strategy recommended by the WHO itself, "evidence supporting the use of taxes is weak."

    It looks at what evidence is available and concludes:

    This review indicates that food taxes and subsidies can influence consumption in high-income countries and that imposing substantial taxes on fattening foods may improve health outcomes such as body weight and chronic disease risk. The findings support current recommendations that taxes and subsidies should be included as part of a comprehensive strategy to prevent obesity.

    Further research is recommended in four areas. First, experimental studies are needed to document actual responses of both prices and consumers to changes in food taxation. These will predominantly involve the evaluation of natural experiments. Second, future modelling studies should examine changes in the entire diet resulting from price changes rather than in single food items to take account of shifts in food consumption within or across food categories. These studies will require the standardization of models for converting energy imbalances to weight changes, thereby avoiding simple, arithmetic equations that imply that weight changes indefinitely. Third, there is a need for research into consumer responses to food taxes in developing countries where differential population effects may be greater. Finally, implementation and administrative costs need to be examined as they represent potential barriers to the feasibility of these interventions.

    It seems to find more virtue in punitively taxing unhealthy food and drink, based on their contents, rather than what food group they fall into.

    Auckland • Since Nov 2006 • 18508 posts Report Reply

  • Hilary Stace,

    My impression of this is that those most opposed to it are those least likely to have to worry about the cost of their grocery bills eg Peter Dunne, Katherine Rich and Bill English.

    Wgtn • Since Jun 2008 • 2004 posts Report Reply

  • Bart Janssen,

    It seems to find more virtue in punitively taxing unhealthy food and drink, based on their contents, rather than what food group they fall into.

    I'd seen similar stuff elsewhere. The problem is that most of the easily identifiable unhealthy food makes money for some business. So the argument gets trotted out that governments should protect business.

    Interestingly the other half of that statement rarely gets mentioned, that is, that governments should sacrifice people in favour of businesses.

    From the WHO report

    The four peer-reviewed studies on food consumption all found that a subsidy, tax or change to a tax altered consumption in the expected direction.

    But the problem seems to be that it's one thing to reduce consumption of a particular type of food and entirely a more difficult thing to show that change results in a change in health.

    Also from the report this gem

    Bahl et al.21 found that a 20% reduction in a soft drink tax resulted in a 6.8% increase in average soft drink consumption.

    What kind of moron actually reduces tax on soft drinks!!!!?!?!?

    Auckland • Since Nov 2006 • 3215 posts Report Reply

  • Kyle Matthews,

    It's not tricky to legislate for this. Existing food legislation *already* distinguishes between fresh, unprocessed, and processed foods.

    Labour haven't promised to remove the tax based on a processed/unprocessed division.

    They're going to split it on fresh produce, which as far as I know doesn't match current legislation.

    I'm not saying it's not possible, just saying that it's somewhat complex, and it's not a lot of savings for not a massive benefit.

    If we're going to have a tax break for healthy foods, it would seem to make more sense to have it for all healthy foods of a certain standard, rather than just picking an aisle in the supermarket that most of them appear in, and then forgetting that we want people to eat healthy frozen foods, healthy meats, healthy breads, healthy snacks etc etc. That's even more complex, but at least it makes more sense than "remove the tax on green shit!" which is, as Russell called it, an opposition headline grab.

    It seems to find more virtue in punitively taxing unhealthy food and drink, based on their contents, rather than what food group they fall into.

    This presumably would have the impact of moving many of those products just over the line into the non-taxed bracket through adjustment of ingredients. Which would be a good thing I guess.

    Since Nov 2006 • 6147 posts Report Reply

  • Russell Brown,

    Bahl et al.21 found that a 20% reduction in a soft drink tax resulted in a 6.8% increase in average soft drink consumption.

    What kind of moron actually reduces tax on soft drinks!!!!?!?!?

    I know!

    The other part of the paragraph is relevant too:

    However, had all of the tax reduction been passed on, consumption would actually have risen by 15%.

    Auckland • Since Nov 2006 • 18508 posts Report Reply

  • Danyl Mclauchlan,

    If we're going to have a tax break for healthy foods, it would seem to make more sense to have it for all healthy foods of a certain standard, rather than just picking an aisle in the supermarket that most of them appear in, and then forgetting that we want people to eat healthy frozen foods, healthy meats, healthy breads, healthy snacks etc etc

    You could have something equivalent to the National Heart Foundation's healthy choices tick, with some government body deciding what kind of food constitutes healthy, but that comes with a whole bunch of new nightmares: different governments stacking the board with toadies and then lobbyists from different industy sectors convincing them that, say, mutton chops, cream and butter are 'health foods'. I'm guessing that Labour contemplated that option and opted for simplicity instead.

    Wellington • Since Nov 2006 • 895 posts Report Reply

  • Idiot Savant,

    But assuming it is passed on in its entirety to consumers – not a given – a 15% move in fruit and vegetable prices is insignificant in comparison to the seasonal movement in prices, or even the gap between different outlets at any time of year.

    The same could be argued about the ETS and petrol prices (its certainly much smaller than long-term swings). And yet no-one doubts its efficacy.

    Small changes in price add up and shift behaviour. That's how markets work.

    Palmerston North • Since Nov 2006 • 1625 posts Report Reply

  • Jo S,

    industy sectors convincing them that, say, mutton chops, cream and butter are 'health foods'

    Mmmm mutton chops ...
    Mental health food?

    is it autumn yet? • Since May 2007 • 80 posts Report Reply

  • Gary Hutchings,

    From Goff's release

    It’s easy for anyone to decide if a product is a fresh and unprocessed fruit or vege.

    well maybe.

    Is Slicing processing? how about Washing?

    A salad of mescaline salad with whole baby tomatoes is exempt, but one with sliced large tomatoes, is not? , or is partially exempt?

    whole carrots are exempt, but bags of washed and sliced baby carrots are not?

    potatoes are exempt, but washed ones are not?

    Unhusked peanuts are presumably exempt , but salted ones are not?

    Unpopped pocorn is exempt, but popped is not, - can you ask for the GST back at the movies for the unpopped ones at the bottom of the box?


    The list goes on....

    wellington • Since Nov 2006 • 108 posts Report Reply

  • Stephen Judd,

    The "healthiness" of fruit and veg is very problematic. As Bart notes, the evidence isn't exactly robust. You can even find plenty of (to a lay outsider) apparently qualified people doubting the lipid hypothesis of obesity, insisting that saturated fats protect against heart disease and cancer, and blaming the ills of modern life on a processed grain-based diet (ie the base layer of the classic food pyramid).

    Perhaps the effect of eating vegetables is nothing more than substituting them for more calorie-dense foods.

    On other fronts, I'm not very exercised about inconsistency. We already have arbitrary tax differences to modify behaviour -- the excise on alcohol and tobacco.

    I'm also pleased to see a policy approach on a health issue that isn't all about blaming individuals for failing to take responsibility and which looks at more structural explanations for behaviour. If only we could take it to the next level, and ask if the decline of home cooking isn't tied up with poverty and part time work and the unaffordability of housing and...

    Wellington • Since Nov 2006 • 2917 posts Report Reply

  • Sacha,

    GST already has exemptions, note 'activists'.

    Vaughan Gunson of the Tax Justice campaign says claims the GST system is universally applied is "not true".

    ...

    Revenue Minister Peter Dunne said in July it is "simply… not New Zealand's policy to have a non-universal GST".

    But Mr Vaughan [sic] lists several economic activities exempt from GST, primarily financial services such as "dealings with money; certain dealings with securities; provision of credit and loans; provision of life insurance; provision of non-deliverable futures contracts and financial options; the payment and collection of interest, principal and dividends; and issuing securities such as stocks and shares".

    Ak • Since May 2008 • 16270 posts Report Reply

  • Sacha,

    Is Slicing processing? how about Washing?

    Yes. No.

    Ak • Since May 2008 • 16270 posts Report Reply

  • Sacha,

    Unhusked peanuts are presumably exempt , but salted ones are not?

    Is a peanut a fresh, unprocessed fruit or vegetable?

    Ak • Since May 2008 • 16270 posts Report Reply

  • Richard Love,

    Is Slicing processing? how about Washing?

    Sliced and washed products are still fresh, and are exempt.

    A salad of mescaline salad with whole baby tomatoes is exempt, but one with sliced large tomatoes, is not? , or is partially exempt?

    Both salads exempt.

    whole carrots are exempt, but bags of washed and sliced baby carrots are not?

    Washed, sliced, and bagged carrots are exempt.

    potatoes are exempt, but washed ones are not?

    Washed potatoes are exempt.

    Unhusked peanuts are presumably exempt , but salted ones are not?

    Salted (or roasted) peanuts not exempt.

    Shelled peanuts exempt.

    Unpopped pocorn is exempt, but popped is not

    Popped popcorn is definitely not exempt. No you can't get GST back on badly processed foods. Not sure if unpopped popcorn is exempt. I don't know enough about what the product actually is.

    It is not difficult.

    Since Jun 2009 • 25 posts Report Reply

  • Russell Brown,

    mescaline salad

    You can get that at the supermarket these days? Awesome!

    Auckland • Since Nov 2006 • 18508 posts Report Reply

  • Richard Love,

    Sacha,

    The actual legislation will almost surely specify that both cut and whole fresh fruit and vegetables will be exempt.

    That's pretty much what every other piece of legislation that makes a category called "fresh fruit and vegetables" does.

    Since Jun 2009 • 25 posts Report Reply

  • Sam F,

    You can get that at the supermarket these days? Awesome!

    I've always been thankful for the name of that salad, it produces such fantastic alternative spellings.

    Auckland • Since Nov 2006 • 1549 posts Report Reply

  • Richard Love,

    You can get that at the supermarket these days? Awesome!

    Haven't you noticed those little potplants and cacti supermarkets sell.

    Since Jun 2009 • 25 posts Report Reply

  • FletcherB,

    Is a peanut a fresh, unprocessed fruit or vegetable?

    Well, it's not animal or mineral... it grows on a tree.

    Is it fresh? I'm not sure, but I doubt things that were fresh but have aged are going to suddenly attract tax after they've been in the supermarket for a day or three? :)

    West Auckland • Since Nov 2006 • 786 posts Report Reply

  • Tim Michie,

    This week's Media7 moves on from our recent show about the Auckland Super City election campaign to look at local body races around the country.

    Yay. If Auckland has cried for better coverage of it's assimilation reporting on local government reform has appeared extremely local top me when it is a national change...

    Auckward • Since Nov 2006 • 543 posts Report Reply

  • JLM,

    I'd seen similar stuff elsewhere. The problem is that most of the easily identifiable unhealthy food makes money for some business. So the argument gets trotted out that governments should protect business.

    When I saw the policy, I immediately thought, good for all those small scale businesses that do most of their business at farmers' markets, like the wonderful daughter/father enterprise just down the road from us. Then I wondered, do they pay GST? Presumably, but I'm not sure.

    Judy Martin's southern sl… • Since Apr 2007 • 222 posts Report Reply

  • Craig Ranapia,

    My impression of this is that those most opposed to it are those least likely to have to worry about the cost of their grocery bills eg Peter Dunne, Katherine Rich and Bill English.

    I'm tempted to say something really rude - instead you're welcome to start doing my grocery shopping. BTW, if Phil Goff can't make ends meet on $243K he needs an extreme budgeting intervention not zero-rated fruit and veg.

    I don't really think this chardonnay class war bullshit adds any value to the discussion, Hillary.

    North Shore, Auckland • Since Nov 2006 • 11783 posts Report Reply

  • Robyn Gallagher,

    mescaline salad

    You can get that at the supermarket these days? Awesome!

    The staff at Kapai cafe always ask me if I'd like "mescaline" in my sandwich. They never give it to me, though, and my salads seem to end up full of green leaves.

    Raglan • Since Nov 2006 • 1841 posts Report Reply

  • Tom Beard,

    What about mushrooms? Fungi are neither animal nor vegetable, and pose a significant zombie threat.

    On the other hand, if this makes the price of fresh truffles come down, I'm all for it.

    Wellington • Since Nov 2006 • 1039 posts Report Reply

  • Ian Dalziel,

    paying the ferryman...
    if the GST is a punt wouldn't that
    make it a kind of pole tax?


    quiche 22...?
    perhaps a masculine salad
    in lieu of a mesclun salad?


    Moche ado about legumes...

    Is a peanut a fresh, unprocessed fruit or vegetable?
    Well, it's not animal or mineral...
    it grows on a tree.

    Charlie Brown we have a problem...
    - er, I think dem peanuts grow underground
    from plants about 50cm high...


    speaking of pods...
    Apple wants to own the word pod


    speaking of segues...
    the new owner of the Segway company
    has died driving one off a cliff...

    Christchurch • Since Dec 2006 • 4555 posts Report Reply

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