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No GST on fruit and vegies in NZ

29 September, 2010

The Labour Party has announced a change in its health and tax policy to include removing GST from fresh fruit and vegetables.

Professors Tony Blakely of the University of Otago, and Cliona Ni Mhuchu of the University of Auckland, give this proposal cautious support as a move to improve health across the board, and reduce inequalities.

"Earlier this year we published research showing an 11 per cent increase in purchasing of fruit and vegetables when 12.5% was taken off the price," says Ni Mhurchu. This finding was from a large randomised trial of 1,100 New Zealand shoppers, and published in the American Journal of Clinical Nutrition.

This increase equates to about half a kilo more fruits and vegetables per household each week, or about six extra servings.

"There is reason to believe that Ma¯ori, Pacific and low-income shoppers might increase their purchasing of fresh fruit and vegetables more in percentage terms in response to a removal of GST," says Professor Blakely.

"This, combined with the fact that low income shoppers spend a bit more in percentage terms on fruit and vegetables, suggests that taking GST off fruit and vegetables is probably also a good way of reducing inequalities.

"Improving our country's nutrition is a challenging and complex policy issue, requiring both a responsible and canny state, and changes in personal behaviour," says Professor Blakely.

"In addition, it requires strong leadership from the food industry – most notably, a full transfer of any GST exemption to lower prices.

"It's important to find effective ways to encourage people to buy and eat healthier foods," says Dr Ni Mhurchu. "Traditionally there has been reliance on education to promote healthier diets. However pricing strategies to encourage consumption of healthier foods could have more powerful effects."

Whilst both Professors Ni Mhurchu and Blakely are cautiously supportive, they note other interacting issues that need to be considered:

  • Responsible marketing, product placement and other activities by the food industry
  • Research and monitoring to ensure that cheaper fruit and vegetables do not just lead to increased purchasing of non-healthy foods.

Regarding the latter, the same study that reported an 11 per cent increase in fruit and vegetable purchasing in response to a 12.5 per cent price discount found no increase in unhealthy food purchasing – which is reassuring.

Source: University of Otago
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Paul | Wednesday, September 29, 2010, 4:50 PM
Wow NZ is the best country in the world!