Posts by Terence W
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Many other countries have chosen not to apply their GST-style taxes to some or all foodstuffs, but that's typically more a nod to social sentiment than practicality, consistency or effectiveness.
Not really: foodstuff exemptions are - in my opinion, and compliance costs notwithstanding - a reasonable attempt at trying to reduce the regressive nature of GST-style taxes by exempting goods which are less elastic to income.
But I agree that removing it would lead to problems with savings not being passed on. It would also be a form of fiscal stimulus (everything else being equal) so probably wouldn't help with our inflation problem.
A better solution, if tax cuts were your thing, would be to create a tax free threshold (more money in the pockets of the least well off), offsetting fiscal impact of the cut by raising the top marginal tax rate accordingly.