FFS leave GST alone Chippy

[SueDonim]

From this morning's Newsroom piece by Jonathan Milne on the F&V GST exemption:

"Already, the Restaurant Association says this policy will likely reduce the operational costs for hospitality businesses. “By eliminating GST from these essential food items, we anticipate a reduction of in the core cost of food for our member businesses," says chief executive Marisa Bidois.

Labour hasn't yet disclosed (or perhaps even considered) whether fruit and veges will be zero-rated all the way through from the farm to the fork, or just when they're finally sold to the consumer. It is likely the benefit to businesses is not in a reduction to their costs, per se, but an improvement to their cashflow."

I had thought about the second point but the hospitality industry wasn't a situation I had considered. I can see this getting messy and as onathan also states:

"Kids, if this is passed, sign up next year for law school – lawyers are gonna have a field day."

Yes, there will be plenty of messes, but I can't see how anyone could expect it to reduce operational costs for restaurants. Currently they claim the GST paid on purchases (for ingredients) and then pay the final gst on the income from the people who eat the food. If the gst is removed from the fresh produce they purchase, they will have to have computer software upgrades to account for the fact that some of their purchases will be gst-able and some not. That's an expense. Then at the end of the process, they will still pay gst on the income received from the sale of the food. The gst component of their purchases doesn't change - the actual cost is already the gst-exclusive price.

Another mess is that there was an article that said part of the tax plan is to remove the ability for commercial property owners to deduct depreciation. So that means that the supermarket owners will have increased costs - which will need to be passed on to the customers to keep profit margins the same. There goes any chance of consumers actually seeing any benefit from the change in gst.