Labour's Election Bribe

Desperate to get back into power in October, New Zealand's Labour are reported to be about to announce the removal of GST (VAT) tax on food.

https://www.rnz.co.nz/news/political/494590/national-claims-labour-s-tax-policy-will-remove-gst-on-fruit-and-vegetables

But, a good argument can be made for this, lowering the cost of living and improving what people consume must be seen as a good thing. 

Obesity Epidemic

I have mentioned several times that on my Italy trip I failed to see anyone obese. Three weeks walking kilometres every day and not a single obese person did I see. Then back living in New Zealand, I don't have to go far to find obesity, a simple trip to the supermarket and guess what, that's right, at least 25% of shoppers are obese. That's a problem.

I've been analysing this and one thing is for sure, the New Zealand diet is very bad but then a lot of what Italians eat is bad also. Italians have very sweet breakfasts, I find what they eat hard to consume at that time of day, and they love their soda drinks. They drink Coke all the time.

So what's up? How come Italians are in such better shape than Kiwis?

I think the following answers the question:

They don't consume as much in a day. That's right, the overall quantity of what goes into their stomachs is less. Italians eat a little bit of this and a little bit of that.

Then their activity levels are higher. They joke that their involvement in sport is watching it on television but that doesn't quite address the point. Italians are doing things, not just sport related things. They're walking, shifting furniture, whatever.

And when it comes to the main meal, they eat less meat and a lot more vegetables. This is quite noticeable and is what stands out as the major difference with NZ (which is all meat and a few vegetables, and much larger quantities overall).

We are talking cultural factors. For NZ to solve its obesity epidemic means addressing the quantities being consumed and nutritional balance. That's a hard task given how entrenched habits have become. Small scale initiatives won't work, so forget school tuck shops and what they sell. A better approach would be to remove GST on certain foodstuffs, making healthier food more affordable, diverting consumers from less desirable foods.

Then get people moving, burning off the calories.

Thoughts About Tax

Working on the assumption that less tax is good and more tax is bad, and that the more you fiddle with something the more likely you are to cock it up or break it, I've developed the following ideas to overhaul New Zealand's tax system.

In my Manifesto for NZ I suggested dropping NZ's GST rate to 10%, scrapping Working for Families, doing away with user pays and making government smaller and leaner, by that last remark I'm talking about health care being made closer to the people, and government departments being dispersed, making government cheaper as salaries are lower in the regions (and it means less risk to NZ due to natural disaster). My ideas involve a mix of cutting costs and raising revenue, such as a huge infrastructure spend leading to employment (this includes state housing) and mining which is a solid foreign exchange earner.

If you don't like the sound of all that, how about the following as an alternative; scrap all PAYE.

That's right, just don't collect PAYE. By simplifying the tax system to being indirect only, the cost of collection goes down for employers and government. What would happen is the individual pay packet would only have superannuation deducted, possibly council rates, student loans and any fines and other levies such as court orders and that would be that. What you earn you keep, when you consume you pay.

My thinking is the GST rate would need to be about 22.5% to achieve this aim. I'm interested in anyone who has tumbled the numbers on this. Working for Families - gone. PAYE - gone. User pays - gone. 

Critics will say this is regressive in nature. That's why I went for the 10% GST and less excise on cigarettes, to lower prices for the poor. But I'm putting this as an alternative, what it does is provide incentives to earn more and instead of taking money from the higher earners, it allows them to consume and invest and grow the economy (more employment).

What am I talking about? Higher earners pay most income tax. I think those earning more than $100,000 pay about 98% of all tax in New Zealand directly - correct me if I'm wrong. It's easy then to just say income tax is a waste of time, just take GST and leave it at that.

More controversial would be to look at exemptions from and zero rating of GST. It makes sense to exempt financial transactions but residential rental being zero rated? What about taking something from that, setting GST at say, 10% as opposed to everything else 22.5%.