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Removing GST on food is back in the news, proving some bad ideas just never go away

In a new article on The Conversation, Director Business Taught Masters Programme Stephen Hickson argues that removing GST on food is not the most efficient way to support New Zealand households.

It’s an idea that voters like. A recent poll suggests 76% of New Zealanders support removing GST from food. But regardless of the support, removing GST on food always was, and still is, a bad idea.

The problem starts with the issue of motivation. Over the years, there has been no single clear goal for removing GST on food. Sometimes advocates argue it’s to encourage healthy eating or reduce obesity, sometimes it’s to help low income families afford better food.

As inflation increases to levels not seen for 30 years, the main reason given now is to ease the cost of living stress on those struggling to keep up.

But the beauty of New Zealand’s tax system is its simplicity. Removing GST on food, or some types of food – for example, “healthy food” – makes that system more complex and costly.

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