18 Feb 2024
Major cracks are appearing in Labour’s flagship GST election policy – with the policy set to cost far more than Labour suggested and benefit consumers by far, far less, National’s Finance spokesperson Nicola Willis says.
“The Taxpayers’ Union have revealed that Labour appears to have significantly under costed the policy by ignoring any increase in consumption of fruit and veges as a result of the policy – despite Labour stating that the change would encourage people to buy more fruit and vegetables.
“The Taxpayers’ Union found that there could be a funding hole of $411 million.
“Treasury’s guidance has always been clear - any predictable change in demand should be accounted for when a policy is costed. Labour appears to have ignored this advice in costing their policy.
“Not a single economist supports Labour’s GST policy. This is a flimsy band-aid that won’t even take fruit and vegetable prices back to where they were a year ago.
“The Government’s own tax working group also found that only 30 per cent of GST reductions are passed on to consumers – meaning 70 per cent of the $2.2 billion policy becomes a subsidy to producers and supermarkets.
“You can see why Finance Minister Grant Robertson was so strongly against this and had to be overruled by Prime Minster Chris Hipkins. Not only will most of the benefit not go to Kiwi consumers but the policy is also set to be hundreds of millions of dollars more expensive than Labour has said.
“Rather than economic band-aids, National will deliver real tax relief – letting an average income household keep up to an extra $100 a fortnight, and an average income household with young children up to $250 a fortnight.
“National will rebuild the economy to solve the cost-of-living crisis, lift incomes, and get our country back on track.”