FGC comments on Labour Party’s GST announcement

FGC comments on Labour Party’s GST announcement

The Labour Party has announced it will remove GST from fresh and frozen fruit and vegetables from April 1 next year, if re-elected in October. It says this would save families around $18 a month and that it will task the newly appointed Grocery Commissioner with ensuring supermarkets and other grocery outlets are not profiting from the change and to make sure the actual cost benefits are passed on to New Zealanders. It says the removal of GST “will be undertaken in a way that minimises compliance and other impacts” for suppliers and retailers.

Read the announcement and factsheet here

The announcement says because GST will be applied on fresh and frozen fruit and vegetables at a zero rate, compliance costs and accounting complexity will be kept at a minimum. It says it will work with business and provide guidance and support as the policy is implemented, particularly to small businesses in the sector, but there is no further detail on how this will happen.

A report by MYOB in 2015 highlighted the compliance differences for New Zealand businesses, where there is GST levied on nearly all goods and services, and Australia, where it is applied to just 56% (but excluding most foods). It found Australian businesses spent twice as long on internal costs and twice as much on external costs of bookkeeping to comply.

Read that report there.

NZ FGC Chief Executive Raewyn Bleakley said: “NZFGC will be advocating for an efficient and fair system to minimise the impact on our members.”

Listen to an interview here with the Minister of Finance on the workability of the proposal.

Bleakley adds: “Having the Grocery Commissioner monitoring the pass-through of the GST exemptions raises some questions. The Government has made good progress in getting the Grocery Industry Competition Act in place, and we’re close to getting a Grocery Supply Code of Conduct enacted, and we wonder if it could be counterproductive if, after all that work, the Commissioner and the grocery team at the Commerce Commission were overwhelmed with this issue and it distracted from them doing their primary function. It would be unfortunate and disappointing if that was compromised by this policy announcement not being resourced properly. We would, therefore, look forward to extra resource if this were to come into play after the election, to make sure the primary purpose of the Commissioner was maintained.

“NZFGC would pay close attention to the establishment of any technical working group to make sure our members’ needs and views are recognised. We will continue to ensure members are kept up to date, advocate for sensible workable fair arrangements, and support members throughout any transition,” says Bleakley.

Source: New Zealand Food & Grocery Council

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