Fresh food in GST debate
Farmers and Labor are on the same side when it comes to broadening the GST to fresh food.
They’re both against it.
The rare political alliance has been prompted by renewed Abbott Government talk about changes to the 10 per cent impost on most goods and services.
Fresh food and health and education services are exempt from the GST as are overseas online purchases of less than $1000.
Liberal backbencher, Dan Tehan, is leading the charge for minimal exemptions, arguing broadening the tax base would deliver up to $21.6 billion in extra revenue annually.
“One only has to look across the ditch for inspiration,” Tehan said on Monday.
New Zealand’s GST covered 96 per cent of consumption while Australia’s only covered 47 per cent and is shrinking, down from 53 per cent a decade ago, he said.
The MP’s comments and those of new assistant treasurer, Josh Frydenberg, who is advocating removal of the tax-free exemption for online overseas sales of less than $1000, provoked a sharp response from the opposition.
“Be in no doubt: this is not members of parliament acting alone,” acting opposition leader, Tony Burke, told reporters in Canberra on Monday.
“You look at what is being flagged today and there is no doubt this government is paving the way for changes to the GST.”
Burke said the government was contemplating applying the GST to people “every time they go and buy food, every time they go to the grocery store, every time they reach out for the fundamentals and essentials of life”.
The National Farmers Federation is especially unhappy about the GST being broadened to cover fresh food.
“We want Australians to eat more fresh food, not less,” National Farmers Federation CEO, Simon Talbot, said.
Increasing the cost of food could mean consumers demand less fresh fruit, vegetables, and protein, leading to a decrease in overall sales and poorer health outcomes.
“From our viewpoint, it makes no sense to increase the cost of fresh food, Talbot said, adding Australians needed greater incentives to eat healthily, not disincentives.
Tehan dismissed as an “intellectually lazy argument” that broadening the GST would hit the poorest in society.
“This completely ignores the fact that applying welfare through an indirect tax means that everyone gets the exemptions.”
The GST will be examined in the government’s strategic review of the tax system in 2015.